From data breaches to ransomware attacks, cybercrime is a constant threat. According to the FBI, losses from cybercrimes in 2024 totaled more than $16.6 billion, up 33 percent from the year before. For businesses, a single cyberattack can have enormous consequences. The global average cost of a data breach hit a record $4.88 million in 2024, according to a report from IBM. 

Protecting your business from cybercrime is essential – and cyber liability insurance can help. Without proper coverage, your business could face significant financial repercussions from a cyberattack. There are two different types of cyber liability insurance – first-party and third-party coverage – and understanding the distinctions between the two can help ensure you have the protection you need. 

Here’s what to know about cyber liability insurance. 

First-Party Cyber Insurance 

First-party cyber insurance offers financial protection for losses that an organization sustains directly from a cyber incident. Examples could include: 

• Business interruption: Pays reimbursement for lost profits amid a cyber incident.
• Cyber extortion: Covers the costs involved with hiring an extortion response team to evaluate your recovery options and negotiate ransom payment demands, if needed.
• Data recovery: Pays for the costs associated with recovering data that may have been deleted or corrupted during a cyber incident.
• Incident response: Helps with the costs associated with responding to an incident, such as hiring an outside IT vendor to investigate the breach, restoring damaged systems, extending call center hours to handle customer questions, notifying affected customers of the breach, and more.
• Legal costs: Pays for legal counsel that may help with any notifications or regulatory obligations resulting from the cyber incident.
• Reputational damage: Can cover crisis management and/or public relations services. 
   

Third-Party Cyber Insurance 

Third-party cyber insurance, meanwhile, offers financial protection for claims made, fines incurred, or legal action taken against an organization due to a cyber incident. Examples could include: 

• Data privacy liability: Covers the costs of working with third parties whose information was compromised, including third-party lawsuits, offering credit monitoring services and/or providing compensation.
• Media liability: Covers any defense or civil damages resulting from defamation, libel, slander, or negligence. Also offers protection from copyright, trademark or intellectual property infringement incidents.
• Regulatory defense: Can pay any fines/penalties related to regulatory action or privacy law violations. 
   

Traditional liability policies often do not cover cyberattacks, making cyber liability insurance an important part of a business’s risk protection strategy. With the right coverage, your business can be protected in the event of a cyber incident. Contact Bell Insurance today to learn more and discuss your options.

Learn More

Bell Insurance Services LLC is a wholly owned subsidiary of Bell Bank. Products and services offered through Bell Insurance are: 

Not FDIC Insured | No Bank Guarantee | May Lose Value | Not A Deposit | Not Insured by Any Federal Government Agency.