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Cyber Insurance for Individuals – update

Cyber-Insurance For Individuals

We believe individuals should purchase some level of personal cyber insurance if their homeowners insurance provides the option. In 2020, the FBI’s Internet Crime Complaint Center received almost 800,000 complaints of cyber crimes, with a total estimated cost of $4.2 billion. That comes out to an average cost of over $5,300 per cyber crime.

State Farm is a rare major insurer offering cyber insurance to individuals and their families as an add-on to its standard home insurance policies. Several smaller companies offer it as well, including some as part of high-value home insurance policies, which have target clients with home values approaching $1 million or more. Some other large insurers, like Allstate and Travelers, offer the option for a level of identity theft protection.

State Farm’s aforementioned personal cyber insurance endorsement covers $15,000 in combined cyber extortion and cyber attack damages for $25 per year. This endorsement, named Cyber Event, Identity Restoration and Fraud Loss Coverage, also covers policyholders for up to $50,000 for identity restoration expenses and fraud losses. This provides individuals with more than enough protection for the average cybercrime cost at an affordable price.

A personal cyber insurance policy provides financial reimbursement for the costs associated with the theft of digital information and assets up to your policy’s limits. But there are a variety of ways cyber attacks can result in a monetary loss, ranging from the theft of bank account funds to payments made after extortion through an anonymous online threat.

No two personal cyber insurance policies are exactly alike, but most generally cover expenses under at least three categories: personal and home protection, extortion and financial loss from fraud.

Cyber personal and home protection coverage (also called cyber attack coverage)

This coverage protects the policyholder against the financial consequences of personal online attacks, also called cyber bullying, or attacks against the integrity of your home systems. For example, if cyber bullying results in the wrongful loss of their job, this feature would cover lost salary up to policy limits.

If a cyber attack results in people being unable to access their home or needing to replace an electronic device, the coverage ensures that they’re reimbursed for the costs associated with resolving the event.

Cyber extortion coverage. Cyber extortion is when online criminals threaten the release of sensitive personal data or prevent individuals’ access to their technology devices in return for a ransom. A personal cyber insurance policy reimburses individuals for payments they made under the duress of an extortion threat. It may also cover the costs of conducting an investigation to diagnose the cause of the event and help prevent such an occurrence in the future.

Cyber financial loss from fraud coverage. Coverage for financial loss or fraud as a result of a cyber event can refer to a wide range of scenarios. These include identity theft, stolen bank funds or fraudulent use of credit cards or checks. Traditionally, this type of protection has been available as part of a standalone identity theft coverage policy, an identity theft endorsement for a homeowners insurance policy or identity theft resolution assistance through a credit card company. But identity theft coverage alone does not protect against the wider range of risks posed by cyber security threats.

Which insurance companies sell personal cyber insurance?

Hanover Insurance
Central Insurance
Cincinnati Insurance
Plymouth Rock
Premium for $25,000 Coverage
Premium for $50,000 Coverage
Premium for $100,000 Coverage

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