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All About Third-Party Cyber Liability Insurance

By Finserv MARKETS - Jul 25,2019
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Third-Party Cyber Liability Insurance

Today, almost every company has digitalized its business. Storing client data on digital files offers much more convenience and security than physical storage of files and documents. However, some of this data is highly classified and any leak of these digital files or transaction details can lead to huge potential losses. Not only does this damage the company’s reputation, but there is also a looming threat of the client suing the company for such personal data leak.

While companies today are taking a number of precautions to ensure the highest level of cyber security, the incidences of cyber-attacks and security breaches are still rampant. Thus, in order to protect their business interests against such threats, many companies are opting for a competent Third Party Cyber Liability Insurance.

What is third-party cyber liability insurance?

A third party cyber liability insurance is a digital insurance that offers coverage to businesses against any financial or legal liabilities arising out of client data breach or cyber-attack. Businesses that can benefit from a third-party cyber liability insurance include-

  • Software development companies

  • IT companies

  • Network and security consultation firms

  • Web hosting businesses

  • App development companies

  • Freelance Programmers

  • High risks businesses such as healthcare providers, financial firms, management consultants and retail businesses, insurance companies, etc.

How Does Third-Party Cyber Liability Insurance Protect A Business?

In case of any unforeseen cybersecurity breach leading to loss of sensitive client data, a third party cyber insurance plan will provide you coverage for-

  • Legal fees for defending lawsuits and attorney payments

  • Government penalties and fines

  • Legal settlement amounts

  • Expenses faced during regulatory inquiries

  • Cost of restoration/ recovery of the lost data

First-Party Vs. Third-Party Cyber Liability Insurance

While many companies opt for a third party cyber insurance policy to protect their sensitive client information, there are some businesses that give more prominence to saving their own technology solutions. Such businesses prefer opting for First Party Cyber Insurance Plan.

In contrast to a third party cyber liability insurance, a first party cyber liability insurance policy only covers for data breaches on a business’ own network.

Some common claims under first-party cyber liability insurance include-

  • Cyber data extortion

  • Accidental destruction of data by a company employee

  • Denial of Services (DoS) attack due to hacking

  • Purposeful destruction of your business data with an intention of sabotage

However, compared to third-party liability insurance, these coverages become quite limited. For example, suppose a financial company witnesses a cyber-security breach leading to the leak of a client’s financial data. If the company only has provisions for first-party insurance, the legal and financial coverage will only be offered for –

  • Notifying a client

  • Financial monitoring

  • PR campaign for damage control and reputation management

If you are looking for third-party cyber liability insurance plans at affordable premiums, explore your options at Finserv MARKETS today! The Bajaj Allianz Cyber Insurance plans available with Finserv MARKETS offer coverage against organized cybercrime, identity theft, cyberstalking, phishing and malware related expenses. To know more about our online application process and easy claim process, contact now!

Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522