Cyber crimes have been around for several years. Insurance companies have developed policies designed to cover many different exposures. Some policies are specifically designed to cover first-party exposures while others address third-party exposures. Some policies cover both.
Businesses must evaluate cyber risk from both a first-party and third-party perspective. First-party losses are costs that cover the company’s own expenses caused by a cyber crime. Examples of such costs may include notification and credit monitoring for compromised individuals (note that some policies consider notification costs as a third-party coverage), data restoration, system repair and lost income.
Traditional first-party insurance policies typically limit or exclude coverage for cyber crimes. For this reason, a cyber insurance policy that covers first-party costs should coordinate with other first-party insurance policies. Such policies may include equipment breakdown, crime and other property insurance.
When a cyber crime occurs against the first party’s system or operations, third parties may be affected. Examples of third-party exposures include: infringement of copyright, invasion of privacy, unauthorized access to confidential information, software that causes the third party’s system to fail, and theft of identity, medical or other private data.
Third-party costs may include defense costs and judgments or settlements for lawsuits brought by customers, employees or others. Costs may also result from an investigation brought by a regulatory body.
Traditional third-party insurance policies typically limit or exclude coverage for cyber crimes. For this reason, a cyber insurance policy that covers third-party costs should coordinate with other third-party insurance policies. Such policies may include professional and general liability, technology and other liability insurance.
Cyber safety is important. If you have any questions or concerns please call Tracy Driscoll at 860-589-3434.