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How good are individual cyber insurance policies?

Author: Kumar Shankar Roy/Wednesday, September 19, 2018/Categories: Insurance, Expert View

How good are individual cyber insurance policies?

The cyber world is a dodgy place, despite being very useful. There is not an iota of doubt that the Internet has given us convenience and improved our life enormously, but at the same time, it has also proven as a dangerous place which exposes us to the risks that exist in cyberspace. Somebody with some technical skills can do damage to your e-reputation. Passwords can be stolen. Credentials can be hijacked. Fraudulent transactions can happen with your credit cards and debit cards. Theft of your personal information can leave you completely exposed. And, there is also cyberstalking. Two insurance companies, ie Bajaj Allianz General Insurance and HDFC Ergo, have floated individual cyber/e-insurance policies to safeguard you financially. Read on to know whether these policies are really as good as they sound.

Basic details

Bajaj Allianz Individual Cyber Safe Insurance policy was the first one in India to give the small guy a protective umbrella. You can get a sum assured of Rs 1 lakh to Rs 100 lakh, with applicable sublimits. The annual premium starts from Rs 662 (excluding GST) for Rs 1 lakh cover to Rs 8,933 for Rs 100 lakh cover.

HDFC Ergo E@Secure Insurance, which offers sum assured from Rs 50,000 to Rs 100 lakh, has different premium rates for individual and family. For a sum assured of Rs 5 lakh, it charges an individual Rs 3,524 and for family the price is Rs 6,167. Besides yourself, the cover can be extended to include spouse and dependent children (maximum upto 4 family members). 

Risks covered

The cyber insurance policies usually cover risks like cyber bullying, social media liability, cyber stalking, malware attack, IT theft loss, and identity theft. There may be small differences in the way items covered under each policy. Anybody above 18 years of age can buy. Ideally you need to inform the insurer within a fixed number of days of any negative cyber event occurring. For a claim, you will need relevant documents, including a copy of FIR lodged with cyber cell/police authorities.

Depending on the nature of the situation, the Bajaj Allianz policy covers defense costs as a result of any claim by affected party, prosecution costs against a third party, reasonable costs of transportation to court and photocopying of documents, restoration costs of the insured's computer system, financial loss, costs including legal fees for a claim lodged by insured and incurred for claiming damages, and cyber extortion loss. Online loss of funds from an account held in bank accounts, debit, credit cards, payment wallets etc. are also covered. In addition, HDFC Ergo also covers legal advice sought by the insured. 

However, one must carefully check if the policies cover financial losses against cash withdrawn through ATM or bank account made through insured's stolen accounts or cards. 

Be careful

Just because you have taken a policy, it does not mean that you have no responsibility in this matter. The insured person is expected to all reasonable measures to safeguard the computer system and digital devices. This is to prevent the occurrence and to minimise the impact of any cyber attack. 

So, you are expected to update antivirus software from time to time, maintain up-to-date patch-states of the OS, browser, e-mail, and other software programs. Also, you may have to maintain back up of all valuable data stored in the computer system in other storage media including external data media. 

You should carefully look at what is covered and what is not covered under different types of risk. This is because the coverage extent depends on the nature of the situation. Do remember that if an event, like identity theft, social media liability, cyber stalking, or malware attack etc., leads to a claim, then the insured can claim only one of the insuring clauses per event. This means, for instance, you cannot claim identity theft cover and phishing cover in a single event. 

Sublimits applicable

Please note that a negative cyber event against you may not lead to 100 per cent sum assured being paid always. The insurance coverage is subject to overall limit for each such activity. In case of Bajaj Allianz, covers for identity theft, social media, cyber stalking, malware, media liability claims, cyber extortion, and privacy breach & data breach by a third party have 10 per cent limit of the liability. While email spoofing cover has 15 per cent limit, cover for IT theft loss and phishing each have sublimit of 25 per cent. 

In case of the HDFC Ergo policy, legal protection, unauthorised online transaction have sub limit of 100 per cent each. Damage to e-reputation gets you 25 per cent, so does identity theft, and e-mail spoofing. Psychological counselling, e-extortion, cyber bullying and protection against digital assets from malware get 10 per cent each. The HDFC Ergo policy also has a deductible. For indemnity above Rs 5 lakh, the deductible is Rs 3500. 

Many a time, such cyber risks can lead to stress, anxiety or such similar medical conditions. Under both policies, the insured can avail counselling services and the insurer will pay to or on behalf of each insured, all reasonable fees, costs and expenses of an accredited psychiatrist, psychologist or counsellor. You may need to have prior written consent of the insurer. 

Exclusions

The exclusions under these policies are also very important. You may be a victim, but if the company has evidence of any bad behaviour, say tata to the claim hopes. Any dishonest and improper conduct detected at your end, even if you have a valid claim, can be a ground for exclusion. If a cyber risk event leads to bodily damage or property damage, you cannot claim it. 

Any unsolicited communication or unauthorised data collection on your part leading to trouble is also not covered. Plus, do remember that even if you as the insured indulge in any obscene or immoral services, no coverage would be given to you. This covers any losses in connection with racist, extremist, pornographic or other immoral/obscene services, statements or representations provided made or committed by the insured.

Also, remember any loss caused by the order of any government authority, consequential losses suffered by a third party, losses related to cryptocurrency etc are not covered. 

The author is a financial journalist with over 13 years of experience

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Kumar Shankar Roy
Kumar Shankar  Roy

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