What Is Home Cybersecurity Insurance and Do You Need It?
As cybercrimes continue to rise, many homeowners are exploring cybersecurity insurance as a way to help protect against identity theft, online fraud, ransomware attacks, and other digital threats.
How Does Home Cybersecurity Insurance Protection Work?
Cyber insurance may cover certain losses resulting from a cyberattack, subject to policy terms, conditions, and exclusions.
Cyber insurance works similarly to traditional home and auto insurance. If a cyberattack occurs, you can file a claim for covered expenses and losses. Home cyber endorsements typically include a policy limit and a deductible. Policy limits and deductibles vary by insurer and policy.
To receive benefits under the policy, the event must generally be reported to the insurer in a timely manner. A common requirement is reporting the incident within 60 days of discovering it. In addition, insurers expect policyholders to follow cybersecurity best practices to help prevent losses. This includes keeping systems updated and backing up electronic data regularly.
What Does Cybersecurity Insurance Cover?
Coverage will vary by insurer and is subject to material limitations and exclusions, but policies generally include some combination of the following:
- Cyber Attack: Unauthorized access to or use of your computer or connected devices, including malware, spyware, and viruses.
- Cyber Extortion: A demand for money accompanied by a threat to disable your devices or distribute information from your systems.
- Online Fraud: Identity theft, unauthorized use of bank or credit card information, forgery, and other forms of deception that cause financial loss.
- Data Breach: Loss, theft, or accidental disclosure of personal or sensitive information.
- Cyberbullying: Harassment, intimidation, defamation, invasion of privacy, and similar acts carried out wholly or partially through computers, smartphones, tablets, or similar devices.
How to Protect Yourself from Cybercrime
Adding cyber coverage to your homeowner’s policy will not prevent attacks from happening. Your first line of defense should still be strong cybersecurity habits. Here are several ways to help safeguard your personal information when using computers, tablets, smartphones, and connected home devices:
- Use strong passwords and enable multi-factor authentication whenever possible. Passwords should be at least 16 characters long and include a combination of uppercase and lowercase letters, numbers, and special symbols.
- According to the Cybersecurity & Infrastructure Security Agency, more than 90% of successful cyberattacks begin with a phishing email that appears legitimate. Avoid clicking suspicious or unfamiliar links or attachments in emails, text messages, or instant messaging services. Instead, visit the company’s website directly.
- Never share personal or financial information through email, text message, or over the phone unless you initiated the contact and trust the recipient.
- Keep your devices and security software up to date. Only download software updates from trusted vendors or official websites.
- Use credit cards instead of debit cards whenever possible, as credit cards generally offer stronger fraud protection. You may also consider mobile payment services such as Apple Pay, which do not share your credit card details directly with merchants.
- Regularly monitor your bank and credit card statements for unauthorized transactions.
Cyber threats are becoming an increasingly common part of everyday life, and the financial consequences can be significant. While practicing strong cybersecurity habits remains essential, home cybersecurity insurance may provide an added layer of financial protection against certain online risks, although not all cyber-related losses are covered. Reviewing your existing homeowner’s policy and understanding available cyber coverage options can help determine whether additional protection may be beneficial.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.