Why Cyber Insurance is a Must-Have

Posted on: Apr 4, 2022 | 3 mins | Written by: HDFC ERGO Team

Why Cyber Insurance is a Must-Have

Every business whether small or big is facing a cyber risk nowadays. There is news of some cyber security incidents almost every day. The cost of dealing with the consequences of such incidents is also very high involving repair, restoration, notification, and strengthening of security. It is therefore recommended to take preventive security measures to avoid cyber threats. However, no measure can be full-proof in today’s times of evolving technology. It is not just the proactive measures but reactive measures also that one should invest in, to fully deal with cyber risks. Getting cyber insurance for your business or yourself is the best way you can be prepared to react to a cyber attack.

Like any other insurance, cyber insurance is comprehensive insurance that covers cyber attacks. Let us assume a business that receives confidential information transmitted through the internet. Due to a security breach, some attackers get access to this confidential information. The attackers now demand a ransom for not leaking the information anywhere. Such an attack is called ransomware. If the business is insured with cyber insurance, it will take care of upgrading network security, legal and notification expenses, and even the ransom amount.

Let us discuss in detail how cyber insurance secures us against cyber attacks.

1. Identity Theft

Unauthorized access to your social media or financial account or any other type of account is called Identity Theft. If someone steals your personnel information, like credit card details, aadhar, and pan card details, he can use it in many ways that can affect you financially, socially, emotionally, and physically as well. Cyber insurance can secure in case of identity theft by covering any direct financial loss. It covers the costs of prosecuting the attackers, legal action, documentation, and counselling services for stress and anxiety. It also offers to reimburse reputational damage.

2. Cyberstalking and Cyberbullying

Cyberstalking and cyberbullying are the reality of social media. It includes mental harassment, defamation, invasion of privacy, and intimidation. It can cause a lasting impact on the victim’s mental health. Personal cyber insurance covers legal costs and prosecution costs for such cases. It also covers the cost of therapy required to deal with the stress caused due to cyberstalking and cyberbullying. If needed it also covers recuperation and temporary relocation expenses.

3. Cyber Extortion

If you have a business, and you receive an extortion threat because your data is compromised, you need not worry. Your cyber insurance policy covers costs of personal, financial, or business data. Cyber extortion coverage also includes forensics costs, costs of managing the threat, and also the cost of IT security consultation to upgrade the system.

4. Malware Attack

In case of a malware attack, where there is a cybersecurity breach due to the introduction of malware in the computer system, cyber insurance covers the direct costs incurred due to malware infection, such as costs of data restoration, damaged data, loss of wages due to data loss and preparing documents copies.

5. Media liability Claim

Media liability is a type of cyber insurance coverage meant specially for media-related businesses such as advertising agencies, publishers, broadcasters, and film/video producers. It protects the insured against unauthorized use of content and other media-related claims. It covers, legal fees, defense costs, and costs of settlement. Such a policy can also provide coverage for directors, employees, officers, freelancers, and contract employees. Some common media-related risks, covered under such a policy are Intellectual property infringement, copyright infringement, plagiarism, breach of contract/license agreement, unauthorized use of trademark or brand names, invasion of privacy, defamation, etc.

6. Phishing and Email Spoofing

Phishing is a communication from sources, which appear to be legitimate, asking you to provide confidential personal or financial data. As the sources seem trustworthy, people are tricked to share information. Such communication is usually through emails. This information can be misused and incur losses to the insured. A cyber insurance policy covers all the losses due to phishing. Spoofing is the same as phishing, it can also be called email phishing. Spoofing uses a header that appears genuine.

7. Preventive Measures for Cyber Threats

There are certain preventive measures that can help to avoid the risk of cyberattacks, such as;

● Change your Passwords Regularly:

You should keep changing your passwords periodically to avoid the risk of cyber threats. Passwords should not be simple English words rather unusual passwords that are a mix of alphabets, characters, and numbers. Never repeat your passwords.

● Use Antiviruses:

Installing a good and genuine anti-virus will give you optimum protection from malware, ransom attack, and other cyber attacks.

● Secure Social Media Account:

Keep your social media account safe from unknown people. Use privacy settings to keep personal information and your account hidden from unknown people.

● Use VPN:

Protect your wifi and connect devices with a VPN. It will block any unauthorized access even if the firewall is penetrated.

Conclusion

Invest in good cyber insurance to protect your business against the cyber threats mentioned above. Before buying, check the coverage with inclusions and exclusions. Different policies have different coverages, you can get a policy customized as per your requirements. Also ensure that the policy covers the consequential costs of a cyber attack, such as counseling expenses, reimbursement of reputation damage, failure of service or product delivery, etc. Cyber insurance is a necessity today which should not be ignored.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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