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Cyber Insurance

Do You Need Personal Cyber Insurance?

Cyberattacks have increased significantly as the pandemic shifted work into the digital sphere. They have compromised large and small businesses as well as the general public. Even if you’ve become smarter and more cautious about which emails you open and which links you click, cybercriminals have become increasingly cunning in their schemes.

Types of Cyberattacks

Cyberattack is a broad category that includes: viruses, identity theft, data breaches, fraud, cyberbullying, and cyber extortion (e.g., ransomware attacks).

Most people are familiar with compromised online payment methods and fraudulent credit card charges. But cyberattacks have gone well beyond this space in causing financial trauma.

Cyber extortion is a relatively new and damaging trend. It’s similar to regular extortion but occurs via a cyberattack. In addition to stealing your information, the hacker holds the compromised data hostage and requests payment for its release via cryptocurrencies, wire transfers, or gift cards. The anonymity of these payment methods has allowed cyber extortionists to remain untraceable.

Inflation and scarcity of cryptocurrencies mean gathering enough currency to pay the ransom is difficult. Furthermore, even if you can access the amount requested, paying the extortion fees is not recommended by the FBI, as there’s no way to know if you’ll get your data back or receive additional requests for compensation.

The Risk

A report by the White House Council of Economic Advisers showed that the FBI’s Internet Crime Complaint Center received 847,376 complaints of cybercrimes in 2021, with a total estimated cost of $6.9 billion.

That comes to an average cost of more than $8,000 per cybercrime. According to a 2019 survey by Verisk, a data analytics company, nearly two-thirds of consumers are worried about a cyberattack, and roughly one-third have already experienced an attack.

According to business strategy group Accenture, in a poll of 47,000 consumers worldwide, 54 percent said they’d be interested in home cybersecurity insurance with premiums tied to using the latest antivirus protection software.

Getting Protection

Cyber insurance functions like any other personal insurance policy. If you are the victim of a cyberattack, you file a claim to mitigate the expenses. Cyberattack insurance policies may cover cyberattacks, cyberbullying, cyber extortion, data breach, and online fraud.

In response to these increased threats, major insurance companies are starting to offer cyber insurance as an add-on to their existing policies.

However, before exploring this option, ensure that you have done everything possible to strengthen your defenses against cyberattacks. Measures include antivirus software, strong passwords, credit-monitoring services, and identity theft protection. Unfortunately, cybercriminals have become more advanced, and these steps have their limits.

Next, check with your home insurance company to see if they offer a cyber insurance rider. If they don’t, explore other companies who do offer it.

Upcoming Trends

Insurance reflects the threats in society, and personal cyber damage is a trend with seemingly exponential growth possibilities. That means the insurance field will adapt and grow with the threat.

You can count on current home insurance providers offering cyber policies soon. New entities purely dedicated to cyber threats are bound to spring up as well.

If no option makes sense to you now, there may be one in the future. Remember, it’s your responsibility to keep up with both the threats and your insurance options as the field evolves.

As cyber insurance becomes more prevalent, the payouts to cybercriminals will rise. Unfortunately, these fulfilled ransoms will only encourage more cyber extortion, creating a vicious cycle.

Best Defense

Whether you obtain cyber insurance or not, your vigilance in protecting your digital presence should trend in the same direction as this threat. As the danger grows exponentially, your vigilance must too.

Personal cyber insurance may provide a safety net, but the best possible result is never encountering any cyberattack. Unfortunately, there’s no bulletproof way to protect yourself, but there are steps you can and should take to mitigate the risk.