When it comes to cyber insurance, not all policies are created equal. Successful agents know that a solid cyber policy does more than cover the basics — it protects your clients’ businesses from the kinds of cyber risks they never see coming. But what exactly should you be looking for and recommending? To help break it down, we spoke with Ed Chadwick, an expert in cyber insurance from Jencap, to outline the three key coverages every solid cyber product should include: first-party, cybercrime, and liability. These aren’t just extras — they’re essentials.
1. First-Party Coverage: Protecting Your Business from the Inside Out
First-party coverage is your client’s first line of defense. It steps in when their business takes a direct hit — whether from a data breach, a ransomware attack, or downtime caused by a third-party provider. It ensures they won’t be left scrambling to handle the fallout.
A solid first-party policy covers immediate response costs like breach notifications and forensic investigations. One essential aspect of first-party coverage is contingent business interruption (CBI), which protects your business when your operations are disrupted by a third-party failure, such as a cloud provider or service platform going down. Chadwick explains, “Everyone operates on a network that’s reliant upon someone else’s server or cloud-based platform.” Without CBI, a disruption to your service providers could bring your business to a standstill, even if you weren’t directly attacked.
2. Cybercrime Coverage: Shielding Against Financial Attacks
As Chadwick puts it, “Cybercrime isn’t a hacker in a hoodie in the basement anymore.” From ransomware demands to business email compromise (BEC), criminals are getting more sophisticated by the day. These aren’t isolated incidents targeting only large corporations — every business, no matter its size, is a potential target. Cybercrime coverage ensures that when criminals come knocking, your clients aren’t left footing the bill.
Cybercrime can lead to significant financial loss, operational disruption, and long-term reputational damage. Invoice manipulation, for example, is an increasingly common threat, especially for businesses that deal with high-dollar transactions. As Chadwick explains, “Invoice manipulation isn’t always seen as a serious issue, but it can lead to larger attacks and has ramifications beyond the financial loss — it can damage your reputation with a core business client.”
Such fraud often involves criminals intercepting legitimate invoices and altering payment details so funds divert to their accounts. Industries like real estate, construction, and manufacturing are particularly vulnerable because they frequently handle large payments across complex supply chains. These changes can easily go unnoticed in a busy accounts payable department, leading to significant financial exposure and potential trust issues with key partners.
3. Liability Coverage: Defending Against Lawsuits and Regulatory Scrutiny
Handling sensitive data comes with a heavy responsibility. Whether it’s personal data, financial records, or healthcare information, your client’s business is expected to protect that information at all costs. But what happens if there’s a breach? That’s where liability coverage comes in and provides coverage when third parties — customers, vendors, or regulatory bodies — start coming after your clients following an incident.
The cost of a data breach isn’t just the immediate damage. The lawsuits, fines, and penalties can pile up afterward. “There’s an expectation that businesses protect that data, even if they use a third party,” Chadwick emphasizes. It’s a common misconception businesses have, believing that if they store data offsite, they’re not responsible for that cyber risk. The truth is that liability still lies with your client.
Privacy regulations are tightening, particularly in states like California and New York, where data-protection laws are becoming more stringent. Businesses are expected to follow these regulations to the letter, and any misstep could cost them dearly. Liability coverage is essential to protect against these ever-growing threats, helping to shield businesses from a cyber breach’s legal and regulatory fallout.
The Right Cyber Coverage Is a Non-Negotiable
First-party coverage, cybercrime protection, and liability coverage form the core of a solid cyber insurance policy. Without them, clients simply aren’t protected. This is where Jencap can be an invaluable partner for agents like you. As Chadwick noted, the role of the agent is crucial. You’re the boots on the ground, guiding business owners through complex decisions. But you don’t have to do it alone. Jencap provides you with real-world examples, expert insights, and the resources needed to educate your clients effectively. Whether you’re helping a small business owner understand contingent business interruption or explaining the hidden dangers of invoice manipulation, Jencap equips you with the knowledge and solutions to meet their needs. Contact us to speak with one of our cyber experts and get a quote today.
