However, while this offers a lot of convenience, an invisible threat also looms: cyber fraud. This threat often catches even the smartest and tech-savvy individuals off-guard.
Take the case of Ananya Sharma, a 32-year-old IT professional from Bengaluru. She received a text about an urgent electricity bill payment to avoid disconnection. Trusting its authenticity, she clicked the link and paid — only to lose ₹80,000 from her account. The message was a scam, and Ananya became another victim of cyber fraud.
Ananya is not alone. Stories like hers are quite common these days. Cyber scams, from phishing to digital arrests, are increasingly sophisticated, leveraging AI and deepfake technology to deceive even the cautious. The consequences aren’t just financial; they leave lasting emotional scars.
This is where cyber insurance comes in. Just as life insurance and health insurance are traditionally seen as safety net for our lives, cyber insurance is a must since our lives are becoming increasingly digital. These policies also help one avail expert support to handle these crises effectively.
Also Read: Vivek Kaul: Financial frauds evolve fast but it’s not as if we’re helpless
Cyber fraud: A growing menace
Pictures tell a thousand words, and sometimes, figures tell a million. More specifically, it is estimated that almost one-and-a-half million cyber fraud cases are reported in India in a single year. This is according to a report by CERT-In. Experts believe that the real figure could be even higher considering many victims do not report such crimes or even lack awareness about how to report them.
What is scary is that new-age cyber frauds are becoming dangerously sophisticated and almost impossible to identify. There are cases where fraudsters use AI and deepfake technology to create convincing scams. For instance, one can receive a fake message from their bank that looks convincingly authentic or an email resembling their company’s domain.
There have been cases where scamsters used deepfake technology to clone voices of their targets’ family members. Even cautious minds are deceived by the level of sophistication. Many elderly people have lost their life savings when fraudsters tricked them into sharing OTPs while impersonating their bank’s customer care.
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Cyber insurance to the rescue
Cyber insurance is a great tool to protect oneself from cybercrimes. Almost all cyber insurance plans protect policyholders from cyber financial frauds and reimburse money if it is stolen through phishing, hacking, or any unauthorized online transaction.
For example, if fraudsters access your net banking account and transfer funds, the policy compensates for your loss. For an annual premium ranging from ₹600 to ₹25,000, one can secure a sum insured of ₹1 lakh to ₹1 crore.
Most cyber insurance policies also come with identity theft coverage. This covers the legal costs incurred if someone hacks into your social media account and/or impersonates you, or misuses your credentials for fraudulent activities. This cover also covers the cost of getting expert help to regain control of your social media account.
Ransomware and malware protection are also useful features of cyber insurance. In some instances, cyber criminals hack into one’s device, lock it, or gain control over it, and then demand money to regain access to the device or data. Here, cyber insurance covers the cost of data recovery, system repair, and expert intervention to address such attacks.
For cases involving online blackmail, cyber-bullying, or defamation, the policy can cover counseling expenses, legal fees and technical assistance to resolve the situation.
Many insurers offer specific cyber insurance plans for specific requirements. There are also plans for students to cover cyber-bullying and theft of funds. Given that we live in the age of social media, the plans also cover social media liability where claims for harassment, slander, intellectual property violations and libel are also covered.
It also covers improper employment practices resulting from the use of social media. There are also plans that cover scams related to online shopping and fraudulent activities related to online sales.
Also Read: Investing 101: How to identify a fraud company
What is excluded from coverage
Like all other policies, cyber insurance also comes with certain exclusions. The coverage does not extend to losses arising from dishonest, fraudulent or malicious acts, intentional violations of laws or contractual obligations. Unsolicited communications, unauthorized data collection and immoral or obscene services are also excluded. Typically, policies also do not cover trade secrets or liabilities linked to celebrities and politically exposed persons (PEPs). Losses due to war, cyber terrorism, natural perils or pollution remain uncovered, as do those resulting from infrastructure failures, licensing fees, trading losses and disturbances linked to commercial, political, or religious activities.
Cyber insurance is no longer just an option today. There is no doubt that the digital age is here to stay. As we embrace the convenience of technology, we must also prepare for the risks that come with it. And cyber insurance is a necessity for navigating the digital age safely. In a world where cybercriminals are constantly innovating, prevention and preparation are crucial.
*Ananya’s case is hypothetical
Sajja Praveen Chowdary, director and head, Policybazaar For Business. Views are personal
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