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Your "internet of things" — that network of smart TVs, video game consoles, refrigerators and thermostats that makes your life easier — poses a security threat.
Where there’s a threat, there’s (usually) insurance. Until recently, cyber insurance has been a product for businesses; now it’s an option for individuals. Personal cyber insurance pays out after an attack on your computer, personal data, home network or personal cloud.
“If you look at the typical household, there are so many devices connected to the internet,” says Lisa Lindsay, executive director of the nonprofit Private Risk Management Association. Each of those connections is a digital entry point, and an opportunity for a cyberattack.
What personal cyber insurance is for
“If you’re using a computer — or your kids are — you have some risk of cybercrime,” says Annmarie Camp, executive vice president of personal insurance sales and distribution at Chubb, which sells cyber insurance as part of other policies.
The most common types of attacks leave viruses or software on your computer, followed by those that damage software or operating systems, according to a survey by The Hartford Steam Boiler Inspection and Insurance Co. Those attacks can allow hackers to see everything you do on the computer, reformat your hard drive or change your data.
Though only 10% of consumers have experienced an attack, 42% of those victims spent $1,000 to $5,000 to respond, according to the survey.
How it works
Personal cyber insurance is likely to come on top of another policy. Hartford Steam Boiler and NAS Insurance offer cyber policies through other companies as add-ons to homeowners or renters insurance.
Chubb offers cyber insurance in its Masterpiece homeowners policies. Similarly, AIG offers cyber coverage to customers with Private Client Group insurance policies for high net-worth customers.
Cyber insurance may reimburse you for things like:
Re-creating or replacing data and files
Extortion money paid to hackers using ransomware
Theft from financial accounts
Counseling, relocation and other services after cyberbullying
Costs to restore your reputation after libel, slander or defamation of character
Both AIG and Chubb’s cyber insurance include a service to assess your home network and devices, and offer security recommendations.
Prevent home network attacks
You can reduce the likelihood of an attack by:
Downloading software updates as soon as they’re available.
Encrypting passwords or using a password manager like LastPass or Dashlane.
Consolidating devices or limiting the number of devices with access to Wi-Fi.
Using one network for connected appliances and gadgets, and a separate network for your computers, tablets and phones. This way, if someone hacks your device network, they won’t be able to access your accounts.
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