First-Party Coverage
Key Takeaway
Insurance coverage that pays for the insured's own losses, as opposed to claims made by third parties. In cyber insurance, first-party coverage pays for breach notification, forensic investigation, data restoration, business interruption, and ransom payments that the law firm itself incurs as a direct result of a cyber incident..
Definition
Insurance coverage that pays for the insured's own losses, as opposed to claims made by third parties. In cyber insurance, first-party coverage pays for breach notification, forensic investigation, data restoration, business interruption, and ransom payments that the law firm itself incurs as a direct result of a cyber incident.
Why This Matters for Law Firms
This term defines the boundaries of what your insurance will and will not pay for. Law firms that misunderstand coverage terms risk discovering gaps in protection only after a claim has been filed, when it is too late to remedy the situation. Reviewing these terms with your broker before binding coverage is a critical risk management step.
Example Usage in Context
During a coverage review meeting, the firm administrator might note: "Our policy includes a first-party coverage provision -- let's make sure we understand exactly what that means for our specific practice areas before we sign off on the renewal."
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