Commercial insurance coverage is often specific to the industry or business operation of the policyholder. Your coverage is selected in conjunction with a broker who understands your exposures and liabilities. If your company contracts other agencies for some of your operations, a first party coverage policy might not be enough of an insurance plan.
An Example of Coverage Types
A prime example of the difference in coverage types deals with the area of computer programming and data management. Many companies are unable to effectively address their IT needs and contract a computer company for data management and cybersecurity needs. This would be a third party contract coverage, as the IT company is tasked with managing the systems and network of another company.
A first-party coverage contract would be with a company that manages its own IT functions. Any work that is done in the house is the responsibility of the parent company if a data breach occurs or another liability claim arises.
The size of the company matters very little when it comes to a cybersecurity threat. The digital age has increased the potential for hacking and mining, creating a need for strong liability coverage in areas involving IT. Consider what type of relationship you have with the IT department, and find out what level of protection you need.