What is First-Party Cyber Insurance?
First-Party cyber insurance is designed in a way that lessens the financial impact on the insured company that has purchased the insurance. It covers cyberattacks and data breaches incurred by your business.
First-Party Cyber Insurance Coverage:
Under this type of cyber insurance policy, the following are covered:
- Provides credit monitoring
- Communication cost with the affected customers
- Executing reputation and PR management campaigns
- Other activities of the recovery
This insurance policy is crucial for organizations that keep sensitive information of the clients or customers online like the credit card number.
Some Common Claim Scenarios for First-Party Cyber Insurance Policy
First-party cyber insurance can provide coverage for a variety of insurable cases, including:
- Someone destroys your data maliciously
- A hacker launches a denial of service attack against your business
- Someone plants malware, virus, or spyware on the hard drive of your computer
- The hard drive of your computer is destroyed by some natural disaster
- Someone holds your business data to get ransom
- An employee destroys the database of your organization accidentally
- The data from your organization's server wipe out due to a power surge
What is the Difference Between First-Party and Third-Party Cyber Insurance?
Now when you got to know about first-party cyber insurance, let us talk about third-party cyber insurance and the difference between these two.
First-Party Cyber Insurance
Third-Party Cyber Insurance
First-party cyber insurance is used to lessen the financial impact on the insured company. It provides coverage in case of cyberattacks and data breaches at the business.
Third-party cyber liability insurance offers liability protection if the insured organization makes a mistake that results in a data breach or cyberattack on its client.
First-party cyber insurance coverage is somewhat like commercial property insurance. It provides coverage for the company's damage from insured cyber losses.
Third-party cyber insurance is the same as general liability insurance. It provides insurance cover against legal expenses that result from an organization being blamed for causing some other company’s cyber losses.
How to Prevent Cyberattacks?
Buying a cyber-insurance policy& is recommended for businesses and individuals, but taking precautions is always necessary as 'prevention is better than cure'. Today, when hacking is an organized crime and a full-time job of many, it is essential to prevent cyberattacks even despite having insurance. Below-mentioned is some precautions to prevent cyberattacks:
- Always lock down your login credentials online, more specifically for emails and social media networks by opting for two-step verification.
- Change your password regularly (at least every two to three months) and use a password manager for saving this information securely. Use a strong password, which is of at least 12 characters with some special characters.
- It is suggested not to save your credit card details online.
- At the time of online purchase, use a safe payment option. Generally, credit cards are the safest option as they enable the buyers to seek credits from the issuing company if the product is not delivered or is not what was ordered.
- Always backup your digital information like your music, photos, videos, health, and financial records, personal contacts by making copies of these data.
- Upgrade your electronic devices and computer with the latest operating systems and updates.
What is New in 2021 for Cyber Insurance
The cyber insurance policies tighten their underwriting guidelines even before the pandemic in 2020 and they were asking for more details to understand the risk for which they were providing the insurance. Whether it is details of the backup procedure or interrogation over specific security controls, insurance companies are expecting that the underwriting process can be more rigorous in 2021.
After the pandemic, almost all the offices migrated from work in an office, where cybersecurity was controlled, to work from home. This sudden shift presented instant challenges, as cyber attackers took advantage of human vulnerabilities and new security. Some of the major challenges that you face are unsecure connectivity and bandwidth, phishing, social engineering, employee access issues, and other manmade cyber risks.
Cyber insurance policies are there at every step of this way. Most of the policies have responded because of broad coverage language for both types of incidents, which are big and small & whether it covered network outages, financial fraud, data breach, and ransomware.
However, not all cyber insurance policies are the same, and the current pandemic has shown some areas of concern. The policyholders should look at the definitions of their cyber insurance policies 21Q such as the employees who are working from home on their personal computers get coverage.
Summing It Up!
First-party cyber insurance can safeguard your crucial data from potential data breaches, cyberattacks, and other internet-based risks. Therefore, knowing about all the advantages of a first-party cyber insurance policy can help you to make a suitable decision of buying one.