As a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Written By Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Lead Editor, InsuranceUpdated: Jun 10, 2023, 10:14am
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A cyber criminal has plenty of entry points to use in order to wreak havoc on your life and finances. Your computers, phones, gaming systems and smart home devices are all potentially susceptible to a cyber attack that might be used to run up fraudulent charges, steal your identity, target your children and block access to your personal information, according to FEMA.
Cyber crime is a growing threat. There are more than 4,000 ransomware attacks every day in the United States since 2016, according to the FBI. That’s a 300% increase since 2015, which averaged 1,000 ransomware attacks per day.
If you are the victim of a cyber crime, you could face financial consequences like extortion demands, expenses to restore a stolen identity, legal fees for lawsuits, and even temporary living expenses due to cyberbullying.
Some of the best home insurance companies now offer personal cyber insurance to help cover some of these risks. Here’s what you need to know.
Personal cyber insurance, also called “cyberattack insurance,” is often sold as an add-on to homeowners insurance and can cover a range of cyber crimes:
In addition to the above types of coverage, personal cyber insurance might include services such as:
If you are the victim of a cyberattack, you can file a claim to help pay for expenses (like legal fees or document recovery) and direct financial losses (like fraudulent credit card charges) covered by your policy. The policy will have a coverage limit and a deductible.
For example, if you have a cyber insurance policy that has online fraud coverage with a $15,000 policy limit and a $500 deductible, and you were the victim of an online scam and donated $2,000 to a fake charity, you would get an insurance check for $1,500 ($2,000 minus $500 deductible).
In some cases, your insurance company might approve ransom payment for cyber extortion cases. But don’t pay it without getting your insurance company’s approval. The FBI recommends not paying ransom as it does not guarantee release of a decryption key and, in some cases, the cyber criminals demand more ransom after the first payment.
If you have a renters, condo or homeowners insurance policy, your insurer might offer personal cyber insurance as an optional coverage. Some insurers offer personal cyber insurance only for high-value home insurance policies.
Personal cyber insurance looks to be a growing market. While only 20% of respondents to Verisk’s survey said they have personal cyber insurance, more than 66% of past cyberattack victims said they’d be receptive to paying for personal cyber insurance if it was offered.
Acuity’s homeowners, condo and renters insurance policyholders may be able to add Identity Theft and Cyber Protection coverage. This includes coverage for problems like cyber extortion, credit card fraud, identity theft, and data recovery and system restoration.
AIG homeowners insurance policyholders may be able to add this coverage as an endorsement. Family CyberEdge includes coverage for Cyber Extortion, data restoration, crisis management and cyberbullying. Coverage limits can range from $50,000 to $250,000.
You may also be able to add identity monitoring services to your Family CyberEdge coverage. For example, we examined an AIG policy that included this service for an additional $80 per person in annual premium.
Policyholders in Connecticut and Massachusetts may be able to add this coverage to their homeowners insurance. In addition to covering problems like cyber attacks, cyber extortion, cyberbullying, data breach and online fraud, Arbella offers cyber claims specialist support.
Chubb homeowners insurance policyholders may already have some cyber protection in their policies, such as document replacement, identity theft resolution assistance, legal assistance for unintentional online libel or slander, and reimbursement for fraudulent credit card charges. But homeowners who add Masterpiece Cyber Protection can get additional coverage for problems like cyber extortion, cyberbullying, cyber financial loss and cyber breach of privacy.
Chubb also partners with a crisis management firm that can evaluate your vulnerabilities and help you recover your identity if you are a victim of online fraud. Chubb will also pay for public relations, legal and digital forensics firms.
Mercury’s home and renters insurance policyholders can add Home Cyber Protection to their policies. This includes coverage for computer attacks, home systems attacks, cyber extortion and online fraud. Mercury also offers access to specialists if you’re a victim of cyber extortion.
PURE Starling is an endorsement to a PURE high-value homeowners insurance policy. It covers problems such as fraud and cyber crime, cyber extortion, and systems attack. It also includes active cyber monitoring and access to cyber security experts.
You can choose five levels of coverage limits, depending on your eligibility:
PURE Starling also covers theft of cryptocurrency due to a cyber attack.
Safety’s Home Cyber Protection is available to policyholders in Massachusetts and New Hampshire. It covers losses for compromised data on computers, mobile devices and other connected technology, such as smart home devices. Safety also offers access to specialists to respond to cyber extortion demands.
You can purchase coverage limits in amounts of $25,000 or $50,000 with a $500 deductible.
State Farm Identity Restoration insurance is an optional coverage available for homeowners, condo, renters, manufactured home and farm insurance policyholders for an additional $25 per year.
State Farm’s base coverage reimburses you for the costs associated with identity theft (up to $50,000) and you’ll be assigned a case manager who will work with your credit card companies, creditors and other financial institutions for up to one year. You may be able to add endorsements for cyber attack coverage and cyber extortion coverage. These endorsements have a combined annual limit of up to $15,000.
Ask your home insurance company if it offers a cyber insurance add-on.
You may be able also to add fraud coverage to supplement what’s not covered by your homeowners policy. While homeowners insurance typically already covers credit and debit card fraud, check forgery and counterfeit cash, fraud coverage can help cover financial losses from fraud such as identity theft. It can also help cover intentional and criminal deception, which is when you have a financial loss after you’re misled.
You may be able to mitigate your own risk from cybercrime with antivirus software, credit-monitoring services and identity theft insurance. But it’s not a foolproof defense and it won’t cover your direct financial losses like fraudulent credit card charges, private tutoring due to cyberbullying or reimbursement if you need to pay a ransom to recover your hijacked personal files.
If a thief runs up your credit card bill, federal law limits your responsibility for unauthorized charges to $50 if you report the loss within two business days. But if you don’t notice the charges in two days, you could be on the hook for up to $500. If you don’t notice within 60 days, you could be liable for all of the charges.
If the fraudulent charges were due to an online fraud, a personal cyber insurance policy could help cover some of these expenses.
Here are steps you can take to reduce your risk of a cyber attack:
If your computer or device is infected with ransomware, the FBI recommends the following:
