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 real.
Cyber insurance was created to cover the millions of dollars in damages companies suffer due to hacks and data breaches. It’s also known as cyber liability or cybersecurity insurance.
In 2017, the first personal cyber insurance endorsement for high-end homeowners was introduced. Now, several insurance companies offer these endorsements.
Are they worth the cost, and what do they cover?
What Cyber Insurance Covers
Most policies will cover damages and expenses related to cyberattacks, including:
- Cyber extortion
- Cyberbullying
- Data restoration
- Identity theft
This means that 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 the 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
Most providers offer personal cyber coverage as an endorsement to your homeowners or renters policy. You can also purchase it 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 also have a deductible, which is 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 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, 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 at recognizing phishing attempts.
Controlling the Risk
Of course, insurance is not enough, and it won’t 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: Shield your network from public view by adjusting your router settings.
- Create multiple network accounts: Limit your connected smart utilities to their own subnetworks. This will prevent hackers from gaining 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: Use a password manager so you won’t have to remember them.
- 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. Go to their website or call the normal phone number to verify the message.
Contact Your Insurance Professional About Cyber Coverage
Technology, the internet, and the internet of things (IoT) are now a part of our everyday lives. Taking the necessary precautions to protect your family and personal information has never been more important. A personal cyber policy can be part of that protection.
To learn more, speak to your insurance professional. They can help you choose a policy that is right for you.
