Cyber coverage is becoming more and more important in today’s world, but what is it and what exactly does it cover? Cyber Insurance generally protects you against claims involving a data breach or loss of data. Cyber Insurance is broken up into 2 different types of coverage. The two types are 1st party coverage which covers damages from cyber losses to your business directly, and 3rd party coverage, which protects you against claims brought against you by another person or entity. Below is a summary of some common claims scenario examples that fall into each of these types of coverage.
1st Party Claim Scenario Examples:
- Ransomware Attack
- Virus/Malware Attack
- IT Failure or Accidental Data Damage
- Denial of Service Attack (DOS)
- Business Interruption
3rd Party Claims Scenario Examples:
- Privacy Breach
- Security Breach
It’s important to note that over the last few years, the majority of claims that are filed have been 1st party claims. Therefore, it’s important when choosing a policy or analyzing your current policy, to make sure you have adequate limits for 1st party coverage. A lot of insurance companies also have separate sub-limits for certain events. For example, the policy may call out $250,000 of coverage, but there may be a sub-limit for ransomware of $50,000. In this case your coverage for ransomware attacks would be limited to $50,000, not $250,000.