Our dependence on digital platforms, personal devices, and other technology for our day-to-day activities has rocketed in the past decade. As society relies more and more on a technology-driven lifestyle, the quantity and quality of data available for threat actors to exploit have also spiraled. Whilst, historically, interest in personal cyber insurance has been limited predominantly to high-net-worth individuals or public figures, increased cyber risks, advances to digital assets, and well-documented, large-scale cyber incidents have sparked demand from the general public for this insurance product. 2022 promises to set explosive growth trends for the personal cyber insurance market with no sign of relenting in the years to come: a recent Swiss Re report predicted that the global market for personal cyber insurance could be worth as much as $3.1 billion by the year 2025.

What Might A Personal Cyber Attack Look Like?

“Hey Alexa, unlock our front door!” Smart technologies make life easier, but poor cyber security can turn a smart home into a disaster. Attackers can use these devices to gain full access to applications that manage smart homes, taking over all connected IoT devices, including doorbells, lights, internet, security cameras, and much more. 

We all know someone who has received a message inviting them to claim a financial prize online. These are often cyber attacks that can lead to identity theft. This is where an attacker steals a victim’s personal digital identity to commit online fraud using the victim’s name 

Identity theft happens when an attacker steals a personal digital identity to purchase goods or services online using the victim’s name. They might also gain illicit access to bank accounts using stolen financial credentials and commit theft.

What Does Personal Cyber Insurance Cover?

A recent Swiss Re survey indicated that 56% of respondents said they would be willing to buy personal cyber insurance. However, rather than purchasing a standalone policy, for many respondents, the clear preference is for “cyber personal extensions” that could be added to existing policies for home, motor, or health. Some coverages may be found as endorsements. A policy will normally cover the insured and any children they may have residing with them, home computers, routers, tablets, mobile phones, and any other devices for personal use. 

We may see the personal cyber insurance product and any related extensions developing further this year – but here are the most common ones on the market today:

1. Identity Theft and Online Fraud

This covers direct financial losses resulting from, for example, identity theft, unauthorized transactions, and other types of fraud. Endorsements to this coverage might include, for example, access to fraud specialists who can assist the client throughout the recovery and resolution process. 

Identity theft covers associated costs such as lost wages, rejected loan applications, and expenses related to filing paperwork for law enforcement agencies and financial organizations. Another endorsement could be for retrieving, replacing, or re-creating financial or personal identification documents.

2. Reputational Harm

This covers any injury to the reputation or subsequent wages of the insured. PR expert costs are likely to be included in this coverage. It may also cover costs for IT professionals to remove any harmful publication. Endorsements are likely to include lawsuit protection for allegations of unintentional online libel, slander, or invasion of privacy.

3. Cyberbullying

This is designed to protect against harassment, defamation and wrongful disciplinary procedures, breaches of privacy, temporary relocation expenses, lost wages, and psychological support.

4. Cyber Extortion

Ransomware has been a key buzzword on the lips of all cyber insurance professionals in 2021. Cyber extortion coverage includes costs for expert assistance in regaining encrypted files managing the threat and reimbursing ransom payments that are approved by the insurer. There are also other ways that insurers are coping with the increase in ransomware attacks, including imposing stricter sublimits and co-insurance. 

5. Malware

Data restoration costs, lost wages, and data loss or damage are typically protected by malware intrusion coverages.

6. Legal Expenses

This coverage deals with reasonable expenses incurred for seeking legal advice and for any claims involving third parties.  

7. Data Restoration

Data breach coverage helps pay for services or costs incurred if personal data is lost, stolen or published. Endorsements might include replacing or repairing electronic data, active cyber monitoring to help prevent or minimize loss, and forensic expenses. This coverage typically only includes costs incurred up to 30 days after the cyber incident.      

8. Consequential Losses

Losses covered by this coverage include, for example, penalties or fines paid by the insured to their bank for failing to maintain the minimum balance required or for defaulting on loan repayments. It may also pay for the removal of viruses or reprogramming of IoT devices around the house.

What’s Not Covered in Personal Cyber Insurance Policies?

Personal cyber insurance policies will typically exclude any computer network, hardware, laptop, tablet, or mobile phone which is not owned or used by the insured for personal purposes. They are also not likely to cover any cyber damage relating to the insured’s trade or profession. Other exclusions include physically lost or stolen credit cards and love scams. 

Although the demand for personal cyber insurance is set to rise over the next few years, the product is yet to fully ripen. Insurance professionals who want to make sure they are ahead of the curb will need to remain updated both on cyber trends and changes to the personal cyber insurance product.

Interested to learn more about the latest developments in cyber insurance? Visit our course catalog for more information on our cyber insurance training.