Cyber events can be costly, and most businesses buy cyber insurance because they can’t afford a massive loss. Breach response, ransom payments, legal fees — these expenses add up quickly. 

But who’s responsible for payment while an insurance claim is in progress?

“Pay on behalf” language is standard in every Coalition cyber insurance policy.*

Many other cyber insurance providers require businesses to pay fees of third-party vendors, like breach response costs, which then get submitted to the insurer for indemnity. But not us. Coalition coverage handles these upfront costs on behalf of policyholders, so they don’t have to worry or wait for reimbursement.

Let’s look at how “pay on behalf” language works, how it benefits policyholders and brokers alike, and why it’s a key differentiator for Coalition’s base cyber insurance form.

How does ‘pay on behalf’ work?

Cyber insurance policies that include “pay on behalf” language allow businesses to use their policy to pay for certain expenses on their behalf, rather than having to pay out of pocket and wait to be reimbursed. This relieves the stress and financial burden that often accompanies a cyber claim, while enabling a quicker response time and eliminating the need for additional paperwork.

“Pay on behalf” language is standard in every Coalition cyber insurance policy.

Biggest benefits of ‘pay on behalf’

Every second counts with cyber insurance claims. Coalition often preaches about how timely reporting leads to better outcomes, so it’s vital that we move quickly, too.

1. Paying policyholders’ expenses allows Coalition to deliver essential services faster. Without the need to assess and verify expenses before reimbursement, we can deliver essential services without delay.

2. “Pay on behalf” language can also provide immediate financial relief to policyholders and eliminate their burden of paying large amounts of money upfront.

3. In the event of a ransomware or extortion event, “pay on behalf” language also means we help facilitate the ransom payment and handle the purchasing of cryptocurrency, a process with which many policyholders are unfamiliar.

4. Lastly, policyholders benefit from a streamlined claims-handling process. We know it’s a huge pain to gather receipts, fill out forms, and wait on a reimbursement check. 

“Pay on behalf” language enables Coalition to take immediate action in the event of a cyber incident, alleviate a major financial burden, and eliminate unnecessary steps when policyholders need it most.

Simplifying claims through advantageous coverage

Most organizations would struggle to come up with a seven-figure sum on a whim to front the costs on a cyber claim, but conjuring such an amount is a near-impossible task for small businesses that:

• Don’t have the financial resources

• Need to preserve cash flow

• Require immediate assistance

Whether it’s covering the cost of a forensic investigation to determine the root cause of an event or notifying customers that their data was involved in a breach, immediate payment means policyholders receive services without delay, ensuring timely resolution.

Cyber events can be chaotic and stressful. In those moments, policyholders don’t want their cyber insurance provider’s promise to pay back. They need a reliable partner that will handle costs on their behalf to ease the financial hardship and ensure timely response.

This blog post is designed to provide general information on the topic presented and is not intended to construe or the rendering of legal or other professional services of any kind. If legal or other professional advice is required, the services of a professional should be sought. The views and opinions expressed as part of this blog post do not necessarily state or reflect those of Coalition. Neither Coalition nor any of its employees make any warranty of any kind, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, product or process disclosed. The blog post may include links to other third-party websites. These links are provided as a convenience only. Coalition does not endorse, have control over nor assumes responsibility or liability for the content, privacy policy or practices of any such third-party websites.

*Insurance products are offered in the U.S. by Coalition Insurance Solutions Inc.(“CIS”), a licensed insurance producer and surplus lines broker, (Cal. license # 0L76155) acting on behalf of a number of unaffiliated insurance companies, and on an admitted basis through Coalition Insurance Company (“CIC”) a licensed insurance underwriter (NAIC # 29530). See licenses and disclaimers. Copyright © 2023. All rights reserved. Coalition and the Coalition logo are trademarks of Coalition, Inc.