The Growing Need for Personal Cyber Insurance

The Growing Need for Personal Cyber Insurance

February 02, 2022

The internet has made our lives easier, but it comes with its share of risks. In just one week, you could receive a threatening automated phone call, 200 junk emails, five worrisome text messages and three fake Facebook invites, all trying to bait you into giving up personal information. These days you cannot surf the web without having an active firewall. The cyber threat is very real.

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?

Think you know about cyber liability insurance?

What cyber insurance covers

Most policies will cover damages and expenses related to cyberattacks, including:

  • Cyber extortion
  • Cyberbullying
  • 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 in a given 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 reestablish 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 aren't even aware they are accessing can expose your family to invisible threats. Teens may also be less experienced than you are at recognizing phishing attempts.

See a cyber liability insurance plan in action.

Controlling the risk

Of course, insurance is not enough, nor will it prevent you from being the target of an attack. Follow these 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.
  • Hide your network: Router settings allow you to hide your network from public view.
  • Create multiple network accounts: Limit your connected smart utilities to their own subnetworks so hackers won't gain complete network access if they attack your smart toothbrush or take over your doorbell.
  • Choose secure passwords: Passwords remain your first line of defense against hackers — make them hard to guess and change them often.
  • Use multiple passwords and manage them: 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 or text from one of your institutions. Do to their website or call the normal phone number to verify the message.

Want to learn more? We can help! Reach out to Sharon Meadows today!