Third-party cyber liability insurance can pay for your business's legal expenses if one of your clients files a lawsuit after experiencing a data breach.
Third-party cyber insurance provides liability coverage for businesses that are responsible for a client's online security. This includes protecting clients from cyberattacks and data breaches. If a client experiences a cybersecurity breach and sues, third-party cyber liability insurance can pay for your business's legal expenses.
Many businesses in the information technology field can benefit from the protection of third-party cyber coverage, such as businesses that install or service computer networks. Other IT businesses that can benefit from a third-party cyber insurance policy include:
Third-party cyber insurance is often included in a tech professional's errors and omissions insurance policy. This package is called technology errors and omissions insurance, or tech E&O. It helps pay for lawsuits when a business – either because of its actions or lack of action – is sued for causing a data breach or another mistake or oversight.
Most IT businesses will benefit more from third-party coverage, since it will protect them from client lawsuits. However, any business that stores sensitive data online should strongly consider purchasing first-party coverage.
First-party cyber liability insurance addresses the financial fallout associated with cybersecurity breaches on a business's own network. For example, if an e-commerce business is hacked and customer credit card numbers are stolen, first-party cyber coverage can pay for expenses such as:
First-party coverage can also pay for expenses associated with cyber extortion. For example, if a ransomware attack is holding a cloud service provider's data hostage, the provider's first-party cyber policy can pay the ransom in order to (hopefully) get the data restored.
Third-party coverage can cover expenses for businesses responsible for clients' online security and data. If an IT company's client experiences a ransomware attack or data breach and sues the IT business, third-party cyber insurance can pay the necessary legal expenses to defend the business in court.
Let's say you're an IT consultant hired to help your client step up a security protocol. You recommend antivirus software that has a few recent well-documented weaknesses. When your client's network is compromised and customers' sensitive financial information is stolen, the client blames you and files a lawsuit.
At that point, your third-party cyber policy can help pay for:
Ransomware, phishing attacks, and data breaches are continuing to rise – impacting more businesses each year. If one of your clients is hacked and sues your business, the resulting legal bills could be devastating. Third-party cyber liability insurance helps ensure that your IT business can survive the financial aftereffects of cybercrime.
Insureon helps small business owners compare quotes for cyber liability insurance and other policies with one easy online application. Start an application today to reduce your business risks.