Imagine this scenario: You wake up one day to find that your home network has been hacked. Personal photos, banking credentials, and other sensitive data are all compromised before you even have the chance to think or respond. And even worse, the hackers are now demanding a ransom in digital currency for the safe return of your sensitive information. You try to comply, but the event ultimately results in a loss of both finances, private information, and data. Having no personal cyber insurance to protect you or help you recover from such a cyberattack, you and your family are left on your own to navigate a path forward and pick up the pieces.
Personal cybercrimes are a reality
While this is a fictitious scenario, it could happen to you or a member of your family. While most people have heard about cyberattacks targeting large corporations, cybercrimes against individuals and their families have also exploded in recent years. With our increasingly connected world comes a greater risk for personal cyberattacks.
The FBI’s Internet Crime Complaint Center has received 3.26 million complaints about personal cyberattacks in the last five years. Experts value the total losses from these incidents at $27.6 billion. This number is trending upward, with over 800,000 incidents and over $10 billion of those losses occurring in 2022 alone.
While cyber insurance was once considered relevant only to organizations, now individuals and families — especially those living a highly connected life and those with significant wealth — will also benefit from additional insurance protection against losses caused by cyberattacks.
Personal cyber insurance options to consider
Cyber insurance covers a wide variety of cyberattacks and cybercrimes. These policies can cover ransomware, identity theft, cyberbullying, cyber extortion, data breach, online fraud, and other crimes. The policies typically also include services such as cyber-monitoring, access to fraud and extortion experts, assistance with replacing or retrieving important personal documents and electronic data, and legal support.
While personal cyber insurance is a relatively new insurance offering, good solutions are readily available today, and carriers are continuing to launch new products and refine their pricing as the market evolves. Today, cyber coverage is typically added as an endorsement (rider) to a homeowner’s policy, with basic options to tailor limits based on the needs of the family or individual. Soon, not only will there be more carriers offering this important coverage, but there will also be a greater availability for customization based on individual needs and options with higher limits of coverage. There will also be more options for purchasing standalone policies, rather than adding this coverage as an endorsement to a homeowner’s policy.
Highly connected and high net-worth consumers face a greater threat of cybercrime
The more online devices, smart home systems, and digital connections people have, the greater their chances of falling victim to a cyberattack. Smart home technology, health monitoring devices, gaming systems, home theaters, and other connected electronics and networks can also contribute to the risks facing high-net-worth individuals and their likelihood of a cyberattack. Additionally, bad actors target high-income individuals for cyber-extortion schemes because of their wealth.
Even though cyberattacks are rapidly increasing, consumers often feel personal cyber insurance is unnecessary or may not know it is available. Many people believe if cyber attackers target them and compromise their bank account or credit cards, the bank or credit card company will simply reimburse them for the loss. However, this fails to account for the ancillary damage that cyberattacks bring and all the other types of cybercrimes. Beyond financial loss, cybercrimes can incite the need for technical support, legal advice, psychological counseling, and other costly obligations.
Being proactive, preventing cyberattacks before they happen
While insurance protection for cybercrimes is a key element of wholistic risk management, preventing cyberattacks from happening in the first place is mission critical. Make sure to implement these precautions:
- Use multifactor authentication on all accounts where it’s available, including financial, email, social media, billing systems, health accounts, and more.
- Keep virus protection and software updates current on all devices; consider turning on automatic updates and backups.
- Think before you click; many cyberattacks start with phishing emails or social engineering strategies that get users to click.
- Use complex, strong passwords, and do not use the same password for multiple accounts.
- Manage your privacy settings on social media, and only share information, posts, and pictures with your friends and family.
- Use multiple networks in your home.
- Beware of using public wi-fi networks.
- Monitor your children’s social media and cell phone activity for signs of cyberbullying and harassment.
- Change passwords frequently on your smart devices and connected household devices.
Considerations for choosing a personal cyber policy and limits
The policy coverage limits vary widely by carrier, ranging from $10,000 to $100,000 to $1 million and more. Depending on the limits chosen, the cost of securing this coverage may be as low as $200 when added to a homeowners policy, and greater than $2,000 when higher limits are selected, or on a standalone policy basis.
Because everyone has a different appetite for risk and different cyber risk factors, it is recommended that you meet with a private client insurance advisor to determine which personal cyber insurance solution and coverage limits are right for you.
In a world of increasingly prevalent cybercrime, there’s no substitute for being informed, prepared, and protected.
Want to learn more?
Connect with the Risk Strategies Private Client Services team at privateclient@risk-strategies.com.
