Should You Buy Insurance in Case of a Cyber Attack?
Hardly a day goes by where the news isn’t reporting the latest cyber attack, releasing stories that some hacker has stolen from a government somewhere or the woes of someone losing hundreds of pounds to a scam. One of the newest areas of the insurance market is known as cyber insurance – insuring yourself against a cyber attack. But is it something we should consider for ourselves and our businesses?
Until recently, cyber insurance has been largely something offered to the biggest corporations and many have suffered well-publicised attacks. Tesco, TalkTalk, Staples, Equifax are just a few names of companies that have been attacked in some way in recent years by hackers and cybercriminals. And all of these companies would no doubt have some kind of cyber insurance in place to help handle the costs involved with these attacks.
Now, US-based company AIG has launched a policy called FamilyCyberEdge that is specifically designed to cover individuals. Other insurers such as Hiscox here in the UK have also begun to offer personal cyber insurance. And all think it is a huge potential market.
How it works
The cover from AIG, for example, is designed to help is anything goes wrong with the customer’s IT systems. This includes data restoration after an attack as well as help for the customer if they are the target of cyber extortion or even cyber bullying. It helps cover the costs involved with reputation management as well such as hiring a crisis consultant if compromising texts or photos are stolen and released.
Hiscox’s policy is similar. It helps people improve their cyber security by teaming with an online risk management tool that helps them score their security and get tips on how to improve it. It also offers a range of cover to help if something does go wrong.
Currently, the policies are mainly aimed at high net worth individuals who have the most to lose if they are attacked. Companies are using their commercial cyber expertise to create policies for individuals and currently, they cost around 10-15% of the price of a home insurance policy.
Another company offering such cover is Hartford Steam Boiler, who sell products via other companies. Their policy is aimed at a wider demographic and has policies that cost as little as $30 a year in the US. They also acknowledge that there is a likelihood that some kind of cyber cover will become standard in home insurance in the next 5-10 years.
As people realise that fraud and ransomware are a growing problem, they start to consider protecting themselves and while banks and credit card companies can sometimes be held responsible for losses, different situations can leave the individual with the bill for a cyber attack and the consequences.
It’s true that not everyone will want to rush out and buy cyber insurance in case of an attack. But for those with a lot of to lose, it is something to consider and for the rest of us, it is worth watching to see when we can include it as standard with other types of insurance and add that extra layer of protection.