Cyber Insurance
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First-party cyber insurance coverage

First-party cyber insurance coverage protects small businesses against the financial impact of data breaches and cyberattacks impacting their own systems.

What is first-party cyber insurance?

First-party cyber insurance, also known as data breach insurance, provides financial assistance to mitigate the impact of breaches and cyberattacks at your small business. It covers the costs of:

  • Communicating with affected customers to comply with data breach notification laws
  • Providing credit monitoring
  • Executing PR and reputation management campaigns
  • Other recovery activities

This policy is crucial for businesses that store sensitive client or customer information online, such as credit card or Social Security numbers.

What is the difference between first-party and third-party cyber insurance?

First-party cyber insurance is designed to lessen the financial impact on the company that bought the coverage (the insured). It covers data breaches and cyberattacks at your own business.

Third-party cyber insurance provides liability protection in case the insured company makes a mistake that results in a client suffering a data breach or cyberattack. It's a key policy for tech companies and IT consultants that could be blamed for errors that led to a breach.

Another way of viewing this distinction:

  • First-party coverage is like commercial property insurance. It covers a company’s own damages from covered cyber losses.
  • Third-party coverage is like general liability insurance. It covers legal expenses that result from a firm being blamed for causing another business's cyber losses.

Common claim scenarios for first-party cyber insurance

First-party cyber insurance can cover a variety of insurable events, including:

  • Someone maliciously destroys your data.
  • A hacker launches a denial of service (DoS) attack against you.
  • Someone plants a virus, malware, or spyware on your computer hard drive.
  • An employee accidentally destroys a database.
  • A power surge wipes out your business server.
  • Your computer hardware is damaged in a storm.
  • Someone holds your computer data for ransom.

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Updated: July 6, 2024

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