Cyber Coverage In Depth – Third Party
In continuation from last week’s post regarding First Party Cyber Coverage, this week we’re going to focus on Third Party Cyber Coverage. In our litigious society, businesses can expect a myriad of reasons to bring rise to a lawsuit which any business, large or small, could fall victim to. The use of computers significantly expands that possibility since there is so much that can transpire in one’s everyday interaction between clients. Business owners could be held responsible for the damage they might cause to an unsuspecting client they or their employees are in direct electronic communication with if they were to transfer a virus which then caused harm or damage to their client’s internal network or further propagated the virus to their clients.
While First Party coverages primarily deal with the implications of a business owner’s owned data or direct responsibility, Third Party coverages often deal with the liability that arises out of the damage to other’s networks, data, reputation, etc. Some common Third Party Cyber Coverages may include:
- Failure to prevent malicious code/virus/malware from a third party (typically a business’ direct clients)
- Misuse of customer data obtained through a data breach
- Defense for claims arising from legal action taken against the company for a data breach
- Privacy liability for stolen employee and customer data
- Regulatory inquiries and possible subsequent penalties arising as a result of network security gaps
As previously mentioned, It’s important to point out that Cyber Liability Coverage is a relatively new product in the insurance market and as such, is constantly changing and evolving very quickly. As a result, the aforementioned information could be different in the future and it’s best to consult with your insurance professional to make sure they find the right policy for you.