The Growing Need for Personal Cyber Insurance
January 25, 2023
Cyber insurance, also known as cyber liability or cybersecurity insurance, was created to cover the millions of dollars of damage companies suffer due to hacks and data breaches. In 2017, the first personal cyber insurance endorsement for high-end homeowners was introduced, and now several insurance companies are offering these endorsements.
Are they worth the cost, and what do they cover?
What cyber insurance typically covers
Most policies will cover damages and expenses related to cyberattacks, including:
- Cyber extortion
- Data restoration
- Identity theft
This means if you accidentally unleash a virus, you will have coverage to restore your system and reinstall your software. Your insurer may also authorize ransom payments to avoid disclosure of stolen information. There are so many different cyber threats that it’s impossible to list them all here, but most of them will be covered under a fully featured personal cyber insurance policy or endorsement.
How cyber insurance works
The majority of providers offer personal cyber coverage as an endorsement to your homeowners or renters’ policy. It can also be purchased as a stand-alone policy. Coverage amounts range from $50,000 to $250,000.
The endorsement has limits and sublimits. The policy limit is the total amount of damages covered each year, while the sublimit is the total amount of coverage provided for each covered event (e.g., $25,000 for cyberbullying). Some policies will also have a deductible, the amount you have to pay out of pocket per claim.
Why you need cyber insurance
According to the Pew Research Center, nearly two-thirds of Americans have been exposed to data theft. Those who have had their identity stolen will tell you how traumatic it is having to spend countless hours and hundreds of dollars trying to re-establish their credit rating, cancel fraudulent claims and reissue official documents.
If you have children, especially teenagers, the risk of a cyber event is compounded. Gaming platforms and websites you don’t even know they are accessing can expose your family to invisible threats. Teens may also be less experienced than you are at phishing attempts.
Controlling the risk
Of course, insurance is not enough, nor will it prevent you from being the target of an attack. Follow these six simple tips to stay out of trouble:
- Beef up your system: Set your firewall and security to the highest settings.
- Get rid of backdoors: Reboot your router periodically.
- Use secure passwords: Utilize a password management system and never forget another password.
- Shield your online presence: Remove personal information from Facebook and other social media sites.
- Manage your subscriptions: Make sure you know what you’re subscribed to.
- Always go to the source: Don’t trust an urgent message from one of your institutions. Go to their website or call the normal phone number to verify the message.
Technology and the internet are now a part of our everyday lives. Taking the necessary precautions to protect your family and personal information has never been more important and a personal cyber policy can be part of that protection. If you would like to learn more, speak to your insurance broker. They can help you choose a policy that is right for you.