Should You Have Personal Cyber Insurance?

Posted by John Cofini on Tue, May 23, 2023 @ 12:22 PM

personal cyber insurance

Many businesses have realized they need commercial cyber insurance coverage, but cybercriminals also target individuals – with devastating consequences. Consider whether you should buy a personal cyber insurance policy.

Cyber Risks Are Everywhere

The 2022 Internet Crime Report from the FBI’s Internet Crime Complaint Center (IC3) shows that cyber incidents are common and are resulting in large losses. In 2022, there were 800,944 reported incidents, resulting in losses of $10.3 billion.

Cyberattacks can take many different forms, including:

  • Ransomware: According to IC3, ransomware infections can impact both businesses and individuals. Since many attacks are unreported, it’s hard to determine the full extent of the damage.
  • Phishing: In 2022, the IC3 received 300,497 reports of phishing. Due to underreporting, the actual number of phishing attacks may be much higher.
  • Investment scams: The IC3 says investment scams were the costliest schemes in 2022, resulting in losses of $3.31 billion. Crypto-investment schemes have been on the rise.
  • Call Center Fraud: The IC3 considers tech and customer support schemes as well as government impersonators to be call center fraud. These schemes often target the elderly.
  • Confidence and Romance Fraud: This category consists of scams where a scammer pretends to be in a relationship with the victim to trick the victim out of money. This includes romance schemes (in which the scammer pretends to be in a romantic relationship with the victim) and grandparent schemes (in which the scammer pretends to be a grandchild who needs urgent financial help).

Cyberattacks Are Becoming Harder to Avoid

You may think you don’t need personal cyber insurance because you can simply use good cybersecurity practices to avoid cyberattacks. Unfortunately, this is becoming harder.

  • Deepfake technology is making spoofed identities more convincing. According to the 2022 Global Incident Response Threat Report from VMware, deepfake attacks have increased by 13%. Two-thirds of respondents said they had seen deepfake attacks in the last 12 months.
  • AI tools are giving hackers an edge. Setting up scams used to take time and effort, but that may be changing. CNET warns that hackers can use AI-powered chatbots to set up scams with extreme efficiency. Axios says hackers are already using ChatGPT to write malicious code and phishing emails.
  • Some cyberattacks occur regardless of what you do. According to PC Magazine, zero-click attacks can compromise a device even if you don’t click on a malicious link. CSO says zero-click attacks often target messaging apps, usually by exploiting a flaw in how they validate data. Although security patches may fix these flaws, this is only possible after developers discover the flaw and make a patch. In the meantime, hackers can exploit the flaw.
  • Smart devices are giving hackers more entry points. You try to keep your smartphone and computer secure – but what about your smart security system, refrigerator, thermostat, car, toothbrush, and baby monitor? Many devices are connected to the internet, which gives hackers more opportunities than ever before to access your network. The FBI has warned that hackers can exploit connected devices to “do a virtual drive-by of your digital life.” Such smart devices are usually unsecured, which gives hackers a path to access your router and, from there, everything in your home network.

What Does Personal Cyber Insurance Cover?

Personal cyber insurance can provide individuals with financial compensation and expert guidance in the case of a cyber event. As coverage terms and benefits vary, you need to review the terms of your policy to find out what it covers. Policies will likely exclude some types of losses, such as those tied to business activities.

Chubb says it has personal cyber policies that provide the following coverage types:

  • Coverage for cyberattacks. This can apply if you are the victim of cyber extortion, financial loss, or a breach of personal information.
  • Reimbursement for nonrecoverable account funds and associated costs. This applies when a cyberattack causes certain types of financial loss.
  • Financial compensation after cyberbullying. Cyberbullying is a growing problem and can be extremely disruptive to victims and their families. Insurance coverage can provide financial compensation to help people get their lives back on track.
  • Access to qualified specialists. If you’re dealing with a ransomware attack or other cyber incident, you may need guidance from specialists to figure out your next move. In the case of cyberbullying, policyholders can access public relations consultants and digital forensic firms.

Do You Need Personal Cyber Insurance?

As cyberattacks can drain your finances and disrupt your life, it’s always best to avoid them through smart cybersecurity practices. Use strong passwords and multifactor authentication, secure your smart devices, watch out for phishing attacks and scams, and avoid known virus vectors, such as public phone chargers. In addition to these basic precautions, you may want to invest in personal cyber insurance. BNC can help you review your coverage needs and options. Contact us.

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