In today’s digital world, almost all businesses have an online presence which can expose you to cyber-attacks and the activities of cybercriminals.
Third-party cyber insurance coverage protects your business and associated third parties from financial losses from a cyber incident or attack affecting your operation.
This guide explains what third-party cyber insurance means, what it covers and why your business needs it.
What is third-party cyber insurance?
Third-party cyber insurance coverage covers any claims made against your company by customers, regulatory bodies, suppliers, vendors and other third parties who have faced financial losses because of cyber attacks against your business.
What businesses would need third-party cyber insurance?
Any business with an online presence that uses third parties in the course of its usual operations needs third-party cyber insurance.
If your business is attacked by cybercriminals who steal third-party information, including financial or personal details, from your network, those affected could take legal action against your company. In addition, regulatory bodies could heavily fine your business if your systems are deemed to be ineffective or your online security is poor.
Cybercrime is rife these days, and many organisations have gone out of business because of the massive financial hit they’ve taken as a result of it. So, if your business stores third-party information on its internal computer network, you need third-party cyber insurance to protect you if the worst happens.
What does third-party cyber liability insurance cover?
Third-party cyber liability insurance covers you for legal costs resulting from actions and claims made by third parties, including regulatory bodies who claim you’re responsible for a data breach.
This type of cyber insurance covers a variety of different critical areas, including:
- Cyber liability: Defence costs and damages after a data breach.
- Network security liability: Failure to keep third-party personal data secure and protected.
- Media liability: Infringement of intellectual property rights, defamation and invitation of privacy.
- Payment card industry liability: Penalties, fines or assessments you’re liable for following a payment card breach.
Every business is different, especially when it comes to third-party interaction, so it’s crucial to discuss your company’s cyber insurance requirements with a financial expert to ensure you have adequate coverage for your needs.
How does third-party cyber insurance differ from first-party cyber insurance?
Third-party cyber insurance is designed to cover any damage or loss suffered by third parties, including customers, suppliers, contractors and the like following a cyber attack or data breach.
In contrast, first-party cyber insurance covers all losses and damages suffered directly by the policyholder.
You can read our comprehensive guide to learn more about the difference between first-party and third-party cyber insurance coverage.
Why is third-party cyber insurance important?
Third-party cyber insurance is extremely important to all businesses for the following reasons:
Financial protection
Cybersecurity incidents often result in significant financial losses for businesses of all sizes and in many different sectors, from huge financial institutions and healthcare providers to the smallest startups.
Third-party cyber insurance protects your business by covering the costs associated with data breaches, including legal expenses, notification costs and regulatory fines. That’s crucial for small and medium-sized businesses that could struggle to absorb those costs.
Liability coverage
When a data breach or cyberattack happens, your business could be held liable for damages to third parties, including your customers, partners or vendors.
Third-party cyber insurance helps cover the costs of legal fees and settlements related to these liabilities, reducing the financial burden on your business.
Regulatory compliance
Many sectors are subject to strict data protection regulations, and non-compliance can land you with substantial fines and even the temporary closure of your operation.
Third-party cyber insurance can help cover the costs of regulatory fines, penalties and related legal expenses.
Vendor and supply chain risks
Many businesses rely on third-party vendors and partners, and any security breach in the supply chain can seriously impact the entire network.
Third-party cyber insurance coverage includes breaches that happen within the supply chain, protecting your business from indirect cyber security risks.
Third-party cyber protection with Stanmore Insurance
If your business has any kind of online presence, any third-party data you hold on your systems is at risk of cyber attacks. So, you must ensure your customer, vendor and contractor data is protected from cybercriminals by investing in third-party cyber insurance.
At Stanmore Insurance, our expert team understands how third-party liability can potentially cripple a business following a serious cyber attack.
For peace of mind, speak to us today at 01204 570370 to learn how third-party cyber insurance coverage can keep you and your associated third parties safe from online criminals and get a free, no-obligation quote.