What Is the Difference Between First-Party and Third-Party Cyber Insurance?

First-party cyber coverage concerns losses the business itself incurs, such as forensic investigation, notification, data restoration, and lost income from a covered interruption. Third-party coverage concerns claims by customers or other parties alleging harm, and may include defense or settlement expenses under the policy. The FTC uses this distinction when explaining common cyber coverage categories.

The distinction matters when comparing quotes: a policy can offer one side more broadly than the other, and different limits or retentions may apply. Check whether response expenses are paid outside or inside the aggregate, who qualifies as a third party, whether regulatory proceedings are included, and what event triggers each section. Also review whether dependent vendors count for first-party interruption or whether their incident creates only a third-party claim.