Homeowners and renters insurance policies are known for providing personal property protections to help victims replace damaged or stolen items. But what about cyber intrusions? Have you stopped to consider whether you are covered in the event of a cyber attack? With nationwide hacking attempts being recorded at an astounding rate of one every 39 seconds in 2017 (and even more frequently today), one in three Americans is likely to fall victim to cybercrime.
To better understand your personal risk, consider the number of internet-connected devices in your home and automobile. In 2019, security researchers with SRLabs demonstrated how a seemingly innocuous a Google or Amazon Alexa action could help hackers to eavesdrop on consumers, or even ask them for their Google password through their smart speakers.
Similar vulnerabilities have been found throughout the Internet of Things (IoT), the broad term for the host of everyday objects embedded with computing devices. The IoT is set up to enable incoming and outgoing data transfer, usually without requiring human-to-human or human-to-computer interaction. As a result, cybercriminals can gain access to your information without raising alarms. Common examples of the IoT include Nest© smart home systems, Ring© doorbell cameras, Sonos speakers, smart TVs and even smart light bulbs, thermostats and refrigerators … all of which leave people vulnerable and exposed to hacking and risk. Cybercriminals can even intercept baby monitors and Roomba vacuums can give hackers your home’s floor plan.
The Cost of a Personal Cyberattack
Just as taking action to protect your home does not guarantee it is safe from burglars, being diligent about your digital security cannot fully guarantee your computer and other devices are safe from cyber intruders. A study by Javelin Strategy & Research reports consumers’ out-of-pocket expenses due to identity fraud was an astonishing $1.7 billion in 2018 — more than double the personal fraud costs just two years earlier. The fact is, cybercrime is a fast-growing and particularly malicious industry, costing consumers billions of dollars every year as well as undue stress and lost data.
Cyber Insurance Coverage for Consumers
In the event you sustain a material loss or identity theft as a result of a cyberattack — whether through a computer, smartphone or the IoT — having the right coverage can mitigate financial damages and assist with recovering lost data, systems, and privacy.
While cyber insurance has long been popular with New Jersey companies, it is now growing more attractive to families and individuals — with a slight difference. Rather than requiring a separate policy, “homeowners carriers have started to offer a cyber endorsement that can be added to any homeowners insurance policy,” reports Chris O’Neill, an independent insurance agent with Scirocco Financial Group in Haddon Heights.
A New Jersey homeowners cyber liability endorsement can help in the event that you or your family are targeted by cybercriminals. These endorsements can include a variety of coverage choices, and costs can vary from one insurance company to another. Your independent insurance agent can help explain your benefit and cost options.
How Can Cyber Coverage Protect Victims?
Imagine that your family had their debit card account number stolen by hackers. What then? Credit card companies may take responsibility to pay for damages in a cyber loss, but some types of loss are excluded from that responsibility to make you whole again. Debit cards, for instance, don’t offer the same zero liability protections credit cards do, particularly if unauthorized charges aren’t noticed and reported immediately. In that case, an individual would have to rely on cyber liability coverage to pay for damages. Other examples can include reimbursement for data recovery and system restoration, resolution assistance after identity theft, and coverage for fraud or extortion.
O’Neill expects the list of options covered by a homeowners cyber endorsement to continue to grow as threats increase, but current policies may include:
- Online extortion: Expenses and ransom paid for threats to cause a network disruption.
- Identity theft: Costs and help in reclaiming the policyholder’s identity.
- Online fraud and intentional deception: Monetary loss due to intentional deception via a traceable form of online communication.
- System compromise: Data recovery and system restoration expenses.
- Internet cleanup: Expenses associated with removing false statements on the internet.
- Cyber Bullying: Costs for counseling, tutoring, temporary relocation, tuition expense.
Personal Cyber Liability Coverage: Get Personalized Advice
Consulting with an independent insurance agent like O’Neill gives clients the benefit of an expert who works with multiple insurance carriers. Once a client’s needs and liability exposure are assessed, an independent agent will explain individual options and costs, giving New Jersey consumers the information and assistance they need to make sound decisions regarding cyber insurance.