Running a business in the Internet Age means having the best cyber security and insurance to cover your data as well as the data of your employees and customers. One of the first things you need to understand about this type of insurance is the differences between first party vs third party cyber insurance.
The first difference you should be aware of is that the terms “first party” and “third party” refer to whose security was breached. As the business owner, and policy holder, you would be considered the first party. This means that security breaches which happen on your end and compromise your data will be your responsibility and you will have to cover any damages.
A third party would be another company which has some of your data on their servers. This can include banks, credit card companies and even suppliers. When one of these companies has a data breach, your data may be impacted and having insurance coverage can help you recover some of the monetary loss.
When you are looking at first party vs third party cyber insurance for your company, it is a good idea to keep in mind that these policies cover different types of security breaches. The first party plans cover you from damages resulting from a security failure on your part and the third party plans cover you from security failures on the part of another company.