Cyber Insurance: What Kinds Of Risk It Covers And What It Doesn’t?

None of us are fully safe from cybercrimes today, although we spend most of our time online daily, which increases the risk. And that is where cyber insurance policies come in. In fact, Truecaller and HDFC Ergo have recently launched a fraud insurance policy.

“In an era where cyber threats grow more sophisticated by the day, cyber insurance has evolved to meet the rising tide of digital crime. Today’s policies cover individuals from digital theft and identity theft to cyberstalking. Some even extend to smart home protection, safeguarding connected devices during a breach,” says Neha Anand, vice president and head of cyber at Prudent Insurance Brokers.

What Is Included

Cyber insurance is available for individuals as well. There are options to cover an Individual, family, or floater cover basis under the same policy. The policy is available on an annual basis. But if required, there are options to opt for a short-term period as well. The coverages available under the policy are as follows. 

Digital Theft Of Funds: This covers loss of funds due to unauthorised access or hacking of an individual's bank account, credit/debit card, or mobile wallet, which is not reimbursable from any other source. "This includes loss of funds due to email spoofing and phishing. The coverage also provides for legal expenses if the individual files a suit against the financial institution for non-payment," says Anand.

Cyber Stalking/E-Reputation Damage: This cover triggers if an individual faces online stalking or extortion threats for posting or having posted personal details (for example photographs) online (for example Facebook). "policy pays for IT security experts' costs to stop or take down the personal details posted online is covered. 

Coverage is available for cyberbullying and harassment by third parties. Counselling fees are also covered if a psychologist is required for medical help. Also, legal costs if the individual wants to sue the extortionists or the stalker are covered," says Anand. 

Identity Theft: If an individual's details like Aadhar card, passport number, bank details, driving license, etc have been used in an unauthorised manner to procure loans, goods, money, or services then the policy pays for the associated expenses to get the documents made again, travel expenses, credit card monitoring expenses.

Cyber Extortion: Financial loss incurred due to cyber extortion and ransomware threats.

Digital Protection Of Assets From Malware: If ransomware is introduced into an individual's system, the cost of decontaminating the system from malware and restoration costs are incurred.

There is an option to cover all these in a single policy. There is also an option to cover only Digital Theft of funds under the policy.

What Is Not

As with any insurance, cyber policies come with exclusions. Gross negligence—failing to follow basic security protocols—won't be covered, and cryptocurrency losses remain out of scope due to their unregulated nature.