Cyber Insurance and Identity Theft Insurance: What's the Difference?

As internet usage continues to increase, so does cybercrime. Approximately one-third of individuals reported having their email or social media hacked at least once in the past year. Some attacks can result in much worse events than a criminal messaging your ex on Facebook.

Cybercrime is no longer a risk that only companies must defend against, but is increasingly also a risk that individuals need to take seriously. One way to protect against the financial costs of cybercrime is by purchasing personal cyber insurance and identity theft insurance.

Personal cyber insurance and identity theft insurance are two distinct forms of insurance, but both can play an important role in protecting people against today’s modern risks.Request-a-cyber-risk-assessment-for-your-business

What is Personal Cyber Insurance?

Personal cyber insurance helps protect against digital risks that connected technologies are susceptible to.

Policies generally extend protection to electronic devices, such as computers, tablets, and smartphones. Policies are also increasingly covering smart home systems that are susceptible to online attacks. For example, a policy might extend protection to smart televisions, speakers, thermostats, lights, doorbells, locks, security cameras, pet cameras, and other devices.

Viruses, trojan horses, and manual attacks are the most obvious risks that personal cyber insurance might protect these devices against. Online fraud, cyber extortion, and other data breaches may fall within a policy’s coverage terms, too.

Should a criminal successfully steal through one of these devices and methods, a personal cyber insurance policy could help pay for any losses associated with the incident. These could include both direct and indirect financial losses.

How Much Can Cyber Theft Cost?

Should you ever be the victim of cyber theft, the losses that you incur can be thousands or more. Thieves will take tens or hundreds of thousands if they have the opportunity to.

As a basic exercise, consider how much you’d lose if a criminal gained access to your bank accounts and withdrew everything. Now consider how much you’d lose if those were your retirement accounts rather than your bank accounts. The costs can be many, many thousands.

What is Identity Theft Insurance?

Identity theft insurance helps protect against instances where someone else claims to be you. The insurance normally won’t do anything if a child forges your name on their school test, but a policy may provide reparations if someone uses your personal data for financial gain.

Identity theft encompasses a variety of situations where your personal information is fraudulently used for financial gain. You might be a victim of identity theft if someone falsely:

  • Opens one or more credit cards in your name

  • Applies for a home loan or car loan in your name

  • Applies for any other type of loan in your name

  • Rents an apartment using your name or credit information

  • Signs up for utilities using your name or address

  • Steals money from your bank accounts or investment accounts

  • Spends money on your credit cards

This still isn’t an exhaustive list of all the ways that you could be an identity theft victim.

If you’re a victim of identity theft, identity theft insurance can both provide compensation and address the actual issue. Most policies will pay for covered expenses that you’re responsible for, and losses are frequently also covered. Many policies also have their own or will pay for restoration services, which is essential if you want to stop the theft from recurring.workplace-violence-coverage-click-here-for-a-quote

What is the Difference Between Personal Cyber and Identity Theft Insurance?

Personal cyber coverage and identity theft coverage are both newer insurance policies that provide protection against emergent risks. The two are fundamentally distinct from one another, however:

  • Personal Cyber Insurance covers a range of online crimes, often including cyber extortion, online fraud, data breaches, cyberbullying, and similar instances. It usually provides compensation for losses incurred because of covered attacks.

  • Identity Theft Insurance covers situations where someone pretends to be you, and thus causes financial harm. A policy may cover credit card application fees, court fees, civil judgments, and lost wages if you have to spend time sorting everything out. The actual work of restoring everything could also be covered.

Who Does Personal Cyber Insurance and Identity Theft Insurance Cover?

Both personal cyber insurance and identity theft insurance can cover an individual or a household. Many policies extend protection to everyone in an immediate family, including a spouse/legal partner and children. Protecting children can be especially important because their data isn’t widely used yet.

How Can Residents Purchase Personal Cyber Insurance and Identity Theft Insurance?

Personal cyber and identity theft insurance are often purchased as an add-on to a home insurance policy. Each can be added onto a homeowners insurance policy, condo insurance policy, or renters insurance policy, and it’s becoming common to add on both coverages since these risks are so prevalent.

Identity theft protection is also available through credit cards and identity theft protection services. Whether these could replace an actual identity theft insurance policy depends on the specific details of a credit card or service’s program.

The two insurances can also be procured through standard standalone insurance policies in some cases. Adding them onto an existing home insurance policy tends to keep the premiums for these coverages lower, though. In fact, the two coverages are frequently quite affordable when added on.

Some home insurance policies treat the two insurances as optional features, optional coverages, or add-ons. Insurance agents might also refer to them as endorsements. An endorsement is a specific coverage that’s added onto the main insurance policy, providing narrowly defined protections for an affordable additional premium.

Protect Yourself Against Cybercrime and Identity Theft

Make sure you’re well protected against cybercrime and identity theft risks. We at Winter-Dent are well-versed in these risks and can help you find insurance policies that’ll provide robust protection. Our agents can get you set up with a solid cybercrime insurance policy or add-on coverage, and we can assist with identity theft protection too. Contact us today for help.Information is power: Subscribe to our blog

 

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