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Cybersecurity Insurance - 3 Part Series Explaining Its Importance
Jeff Ryan - CLU, ChFC, AIA, CIC, CPCU
March 13, 2023
Cybersecurity Insurance - Part 1 of 3
This is the first in a three-part series on Cyber Insurance. We are going to review the major types of coverage available to the insured (first-party) and to others (third-party).
Part 1: Cyber Insurance
First-Party Coverage:
Cyber insurance policies typically offer two types of coverages: first-party and third-party coverages.
First-party coverages respond to the losses experienced by the business owners themselves Examples of first-party coverages commonly offered with cyber insurance policies include:
- Data recovery: This compensates businesses for recovering data lost or damaged due to a cyber-attack or system failure.
- Business interruption: Provides financial reimbursement for income lost and extra expenses necessary to resume normal business operations.
- Cyber extortion: Extortion occurs when Hackers gain control over their data and only give it back when the business owner pays their price. This type of loss can be caused by malware introduced to their computer system, phishing campaigns, or even phone calls misrepresenting trusted advisors.
- Crisis management: Businesses can also incur costs with seeking professional advice and managing public relations
- Notification costs: This coverage helps businesses cover the costs of notifying clients or regulatory agencies following a data breach.
- Forensic investigation: This coverage provides financial assistance for the costs of investigating a cyber incident, including identifying the cause of the incident and determining the extent of the damage.
First-party Cyber Insurance coverages are designed to help businesses recover from a cyber incident by paying for their own losses and expenses.
Because cyber insurance is not standardized, specific coverages vary depending on the insurer and policy. It would be wise to employ the services of a knowledgeable insurance professional to carefully review their options to ensure they have adequate protection.
About the Author: Jeff Ryan has been a licensed insurance agent since 1978, later becoming a full-time insurance professional in 1983. Since then, he has been the principal of The Ryan Agencies with offices in Hornell, Jasper, and Wellsville. The agencies serve approximately 15,000 clients in New York and Pennsylvania. Jeff holds numerous credentials including the Chartered Property & Casualty Underwriter (CPCU), Certified Insurance Counselor (CIC), Accredited Advisor in Insurance (AAI), Chartered Life Underwriter (CLU), and Chartered Financial Consultant (ChFC) designations. He holds a Master's Degree from the American College. Jeff enjoys writing about all things insurance and welcomes your questions and feedback.
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