Personal Finance

What is meant by cyber insurance?

| Updated on July 20, 2020

Cyber insurance protects businesses and individuals against online risks such as data breach, identity theft and unauthorised transactions. It typically covers financial losses (depending on the cyber incident) and costs of legal fees and expenses. The insurance also covers expenses incurred or associated with cyber threats. For example, if a policyholder employs IT services to recover lost data or remove specific data online, the costs for employing the service will be covered.

In India, two companies — Bajaj Allianz and HDFC ERGO — offer one-year cyber insurance policies to individuals. These are valid for a year, after which the policyholder has to renew it. The policies provide cover against almost all kinds of cyber threats.

Note that there is a deductible (in the case of HDFC ERGO) and a waiting period for specific threats.

You also have sub-limits for each of the threats. The policyholder should check them before getting the cover.

In addition, policyholders are expected to adhere to certain protocols such as constant updating of systems (not many do it on a regular basis). They are also subjected to strict evaluations of their security procedures before the claim is paid.

Since these policies are new to the industry, the products are yet to evolve, and need to gain more clarity.

Published on July 20, 2020

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