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Cyber Insurance

Today, various organizations rely on Internet-based technology to reach out to their prospective customers and pursue their digital marketing goals.

All digital tools expose these organizations to the risk of cyber threats. A cyber-attack can cause moderate to extreme loss to an individual as well as small and large entities.

All the business organizations or companies that are directly or indirectly involved in online payment transactions, customer data management, information storage, use of payment gateways, or cloud services should definitely consider buying cyber insurance in India. Amid the proliferation of smart devices connecting to vast business networks, the risk for malicious attempts on an organization's assets is even higher.

To effectively combat such cyber threats, organizations now need to include cyber insurance policy

as a part of their risk mitigation plan. Cyber insurance in India is a measure of countering risks to neutralize cyber risks.

Cyber Insurance Statistics so far…

As per the Data Security Council of India (DSCI), in 2018 there has been a 40 percent rise in the Cyber insurance purchase in India. Cyber threats are on a constant rise and the associated risks are provoking the organizations to get cyber insurance cover to offset financial liabilities that may arise due to any breach.

As per the report, the cyber insurance market is expected to grow globally at a CAGR of 27 percent from INR 29,400 in 2017 to INR 1.59 lakh Crore in 2024.

What is Cyber Security Insurance?

As mentioned earlier, cybercrimes are rapidly increasing. Data/security breaches continue to affect millions and the reports of breaches are also dramatically rising. Unauthorized access is a common example of a security breach. This is where the role of cybercrime insurance comes into play. It offers compensation for expenses, fees, and legal costs arising due to cyber breaches. It also includes the loss or theft of the client/employee information due to the hacking of the organization’s data.

Data security is one of the primary responsibilities of companies as they have access to their customers’/ users’ private & confidential information. Having cyber insurance in India is a must for such companies.

Features and Benefits of Cyber Insurance

The main features and benefits of a cyber-insurance policy are enumerated below:

  • Protection against cyber threats and cyber crimes
  • Financial cost coverage
  • Unique plans to offer coverage to individuals
  • Safeguards big and small organizations from crippling down due to the damage caused by a cyber-attack
  • Ensures cyber safety and security
  • Easy online purchase facility

Types of Cyber Insurance in India

1. Individual Cyber Insurance- Bajaj Allianz General Insurance offers Individual Cyber Insurance in India.

2. Cyber Insurance for Organizations- HDFC Ergo General Insurance is the most suitable cyber insurance in India for commercial businesses.

For details read on:

Coverage Provided by Bajaj Allianz Cyber Individual Insurance

1. Identity Theft: It offers protection against any unauthorized and fraudulent access to alteration, usage, or deletion of the personal data that is stored in the insured computer system including all digital devices. The coverage provided includes:

  • Defense Costs
  • Third-party prosecution costs
  • Transportation expenses incurred while traveling to court
  • Expenses incurred on Xerox of all the documents

2. Social Media Liability: It covers the cost and legal liabilities resulting due to a cyber-attack. It includes prosecution and defense costs against identity theft of the official Social Media accounts of the insured. It also covers:

  • Defense Costs
  • Third-party prosecution costs
  • Transportation expenses incurred while traveling to court
  • Expenses incurred on Xerox of all the documents

3. Cyber Stalking: When someone is threatened or harassed using any mode of digital communication, it is called cyberstalking. The plan offers compensation for costs incurred for the prosecution of a criminal case against a third-party (if any).

4. Malware Attacks: It is one of the most recurring and common cyber-attacks in which malware or malicious software infiltrates with the insured system, usually without the knowledge of the user and steals data, payment information, credentials, etc.

It can cause huge loss to an individual, company, and even the government. The plan also covers:

  • The cost incurred on restoring the computer system due to Malware Attack
  • Third-party prosecution costs
  • Transportation expenses incurred while traveling to court
  • Expenses incurred on Xerox of all the documents

5. IT Theft Loss: In some cases of cybercrimes, the funds are wrongfully paid by a person due to an unauthorized third-party cyber intrusion into their computer system. Compensation is offered for expenses incurred due to:

  • Financial losses resulting due to IT Theft
  • Legal costs associated to a claim filed by the policyholder against a payment system operator or a financial institution
  • Third-party prosecution costs

6. Phishing: This kind of cyber intrusion involves a disguised attempt by establishing trustworthy communication through electronic communication to extract sensitive information like passwords, usernames, and even credit card details of the user.

It covers the financial losses that one bears due to a phishing attack and also the prosecution costs against a 3rd party for this cyber-crime.

7. Email Spoofing: Email spoofing is quite common these days. As the name suggests, involves a wrongful or forgery manipulation of an E-mail header, which appears to be from the authenticated source.

It covers the financial losses that an innocent person has to bear due to email spoofing and also the prosecution costs against a 3rd party for email spoofing.

8. Media Liability Claims: It specifically covers legal liabilities arising due to unintentional dissemination of any digital content as a result of a Cyber Attack on the insured computer, laptop, phone, or any other digital device. Compensation is offered for:

  • Defense costs arising due to the cyber attack
  • Prosecution costs against the third-party for this wrongful act
  • Transportation expenses incurred while traveling to court
  • Expenses incurred on Xerox of all the documents

9. Cyber Extortion: It provides coverage against any cyber threat made with the intention of a data breach, privacy breach, and cyber-attack. It covers:

  • The loss incurred by the insured due to cyber extortion as a result of a cyber-extortion threat.
  • Prosecution costs against a 3rd party for cyber extortion.

10. Data & Privacy Breach by a Third-Party: There can be an unauthorized disclosure of insured’s personal data stored in a third party's computer system. Legal costs incurred by the policyholder while claiming third-party damage for data and privacy breach are covered.

Bajaj Allianz Additional Cyber Insurance Coverage

1. Counseling Services- Apart from coverage for incurred legal expenses, there is an option of extending the scope of coverage with this add-on benefit. It covers all the reasonable expenses incurred on undergoing mental health treatment from a certified counselor, psychiatrist, or psychologist to cope up with the anxiety and stress caused due to being a victim of a cybercrime.

2. IT Consultant Services Cover- The cost of hiring an IT consultant(s) in order to prove the extent of financial loss is also covered by the insurer.

Exclusions of Bajaj Allianz Cyber Liability Insurance Policy

There are numerous inclusions that the cyber insurance policy offers, but there are some exclusions that are not covered under Bajaj Allianz Cyber Liability Insurance Policy:

  • Bodily injuries
  • Damage caused to the property
  • Unsolicited communication
  • Improper and dishonest conduct
  • Unauthorized collection of data
  • Immoral services / obscene acts

HDFC Ergo Cyber Insurance

This Cyber insurance policy is specifically designed to safeguard commercial businesses/individuals against various unforeseen first-party and third-party liabilities. It covers risks arising due to cyber exposures associated with networks, information assets, e-business, and the internet.

HDFC Ergo First Party Cyber Liability Insurance Cover

The coverage of this plan is listed below:

  • Legal liability coverage in case of any loss arising due to fraudulent e-communication when the insured tends to transfer funds or a certain value or property in faith.
  • E-Theft, loss along with the fees charged by a professional negotiator. It covers the loss incurred due to any transaction succumbing to blackmail.
  • The loss incurred due to e-vandalism by a third-party or an employee.
  • Privacy notification expenses (subjected to sub-limits).
  • E-Business interruption along with extra expenses.
  • Crisis expenses incurred due to the fees charged by a public relations consultant ( subjected to sub-limits)

HDFC Ergo Third-Party Cyber Liability Insurance Cover

The coverage of this plan is listed below:

  • The plan covers disclosure liabilities arising due to system security failures faced by the insured. Such disclosure may result in unauthorized access to the system/data or broadcasting of private information on social media.
  • Conduit liability claims arising due to system security failures causing third-party damages.
  • Content liability claims arising due to copyright, intellectual property, and trademark infringement.
  • Reputational liability claims arising due to defamation (slander, libel) and invasion of privacy.
  • Defense costs cover is available for costs incurred in defending any claim brought by a licensing or regulatory organization, government agency, including system security failure, claims to result in the unavailability of the system to the customers.

Exclusions of HDFC Ergo Cyber Insurance Policy

This cyber risk insurance policy does not offer compensation for a claim arising due to the following reasons:

  • Mechanical failures
  • Gradual deterioration
  • Media failure or malfunction or breakdown
  • Electric disturbance
  • Fraudulent claims
  • Bodily injuries, diseases, sickness, damage to any tangible property or death of any person is excluded
  • A deliberate attempt to violation of any regulation or laws

Tips to Enhance Cyber Security

Mentioned below are some of the tips to enhance cyber security and effectively prevent cyber risks:

  • Follow effective cyber security measures. Instantaneously respond to threats and stop it then and there with an appropriate anti-malware.
  • Allocate cyber insurance cost in your company’s budget.
  • Enhance cyber security expertise and take measures to bolster security.
  • Ensure security and productivity by providing employees with the devices that they know how to operate and function.
  • Boost security measures with an adequate cyber insurance policy to ensure uninterrupted business operations.
Written By: PolicyBazaar - Updated: 24 June 2019
Q:

Why do I need cybersecurity insurance in India?

Ans:

With the increasing number of internet abled devices and applications, more and more organizations
and individuals are now vulnerable to cyber-attacks and related crime. Just like corporate insurance,
group health insurance, businesses now need cyber insurance cover to ensure security against cyber
risks. A cyber insurance policy ensures financial and legal support to help an organization to combat
such issues without disrupting the functioning of the organization.

Q:

Who can buy a cyber-insurance policy in India?

Ans:

Any Individual person above 18 years of age is eligible to get cyber insurance cover.

Q:

What is covered under cybersecurity insurance?

Ans:

Cyber insurance plans are designed to cover various legal and financial losses that may result due to cyber-attacks. Additionally, the policyholder can also get coverage for physical hardware damage or loss of business income (if any). You can get your cyber insurance plan customized as per your business security model.

Q:

Can cyber risk insurance replace cybersecurity defense?

Ans:

Cyber risk insurance can effectively cover the damage resulting due to a cyber-breach, but a cyber-risk management plan should also complement cyber-security technology.

Cyber insurance providers assess a company’s cyber-security model before issuing the cybersecurity insurance policy. Strong security models ensure better and enhanced coverage.

Fragmented security model can make it difficult for the insurance provider to assess the company’s security model. This can lead to inadequacy in cyber insurance policy coverage.

If the organization does not have appropriate cybersecurity solutions, then its cyber insurance policy or claim can be invalidated.

Q:

What is the tenure of a cyber-insurance policy?

Ans:

A cyber insurance policy is usually valid for a year.

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