Personal Cyber Insurance: Massachusetts Consumers Take Note

Personal cyber insurance is an increasingly common endorsement that Massachusetts consumers are adding to their home or renter’s insurance policies. Much like the cyber insurance that exists for businesses, personal cyber policies are designed to protect individuals and their families.

We hear from people who tell us they don’t need this coverage because they don’t do any online banking. Or else they think they are protected via their credit monitoring/identity theft protection plan.

But increasingly, Bay State households are discovering that cyber attacks can happen to anyone—even those who closely guard their passwords and practice careful digital habits. Meanwhile, identity theft protection isn’t always designed to address the major types of losses associated with a cyber crime.

Just this month, Dedham, MA police warned residents about a cash soliciting scheme wherein the fraudsters pose as federal officials. Victims are instructed to send money via Bitcoin, in order to resolve identity theft issues and phony purchases made in victims’ names. The criminals are sophisticated enough to utilize local police phone numbers, lending further credibility to their scam. And this is just the latest example of a local attack on individuals.

In 2020 alone, the Massachusetts Department of Unemployment Assistance (DUA) office has received 58,000 fraudulent unemployment claims .  (These instances may or may not involve stolen social security numbers and other sensitive data. Here’s what you should do, per Mass.gov, if your identity was stolen as part of a phony unemployment claim.)

Here’s more on this important and evolving coverage line:

What is personal cyber insurance?

Personal cyber insurance is designed to address direct losses you may suffer as the result of a cyber attack. A personal cyber attack could include:

• Malware attack (a computer virus infiltrates your device or smart appliance, gaining access to financial information);
• Ransomware attack (a hacker holds your personal files/data for ransom, denying you access until you submit payment—usually via Bitcoin);
• Cyber fraud or social engineering (a criminal poses as your accountant, or work colleague, or car dealer, asking for money via wire transfer; you voluntarily part with your money or private info, but only because you believe it is going somewhere legitimate)
• Cyberbullying or harassment (someone publicly harasses you or a family member online, leading to mental anguish, transfer of schools, loss of job, loss of clients, or other serious consequences)

There are dozens of examples that fall within these categories. And new types of attacks are cropping up every day.

Who needs personal cyber insurance?

It’s a good idea for everyone to at least consider this coverage. Why? Because even if you don’t own smart appliances, or talk to Siri, or carry a financial app on your phone, you’re still probably exposed to hackers in one way or another.

Online bill paying, e-filing your taxes, completing a digital loan application, clicking a link in an email from an unknown sender… There are hundreds of ways we open the door to hackers every day.

So, it’s worth asking your Massachusetts insurance agent how personal cyber works and requesting a quote, which doesn’t cost you anything.

How is personal cyber insurance different from identity theft insurance?

You may hear these terms used interchangeably, but they are often two distinct types of protection. For many people, it makes sense to carry them both. The key difference (not always, but often) is direct versus indirect loss.

Identity theft insurance usually covers indirect costs: repairing the damage done after an attack. So, for example, if your financial information is stolen, this type of coverage might pay for things like:

• Fees for lawyers, financial advisors, or other professionals assisting with reclaiming your financial security
• Days lost from work (lost wages) while dealing with banks and creditors
• Personal help mediating your credit, going forward
• Credit monitoring services (e.g. LifeLock, Credit Karma)
• Copies of your credit reports
• Loan re-application fees (if any loans were denied as a result of the fraud)

NOTE: identity theft coverage usually doesn’t pay for the actually funds lost. And in the case of a “social engineering” attack, where the victim sends money or info voluntarily, there may also be exclusions.

Personal cyber insurance, on the other hand, addresses direct losses associated with cyber crime—even socially engineered phishing scams. So, if your account is hacked or you mistakenly wire funds to someone who isn’t your bookkeeper, you could potentially get that money back (up to the limit of your coverage and minus your deductible, of course).

Why do they have to be two separate types of coverage? Well, that’s a good question… better left for a longer article. Suffice it to say, some carriers are beginning to bundle these protections together. Ask your agent about today’s most comprehensive options.

What does personal cyber insurance cost?

To give you a ballpark, our carriers’ personal cyber insurance costs run between $3 and $42 per month—or $36 and $500 per year—for coverage limits that range between $25,000 and $250,000.

In other words, personal cyber insurance is not a singular product. Different carriers offer it with different features. So, just like asking, “what does a car cost?” you will always find a range of answers.

Even with the same carrier, there’s no single price tag for every household. Premiums are based on several factors, including how much coverage you purchase, the amount of your deductible, and the specific types of loss events included in your program. (Some carriers offer broader menus of coverage and varying degrees of customization—especially for high-value home insurance policies.) Some will include an element of identity monitoring services and/or theft protection—so you don’t have to purchase this separately.

It’s a good idea to discuss recommended limits and recommended coverage types with your agent. Don’t have a local agent yet? No problem. That’s what we’re here for. Call us at 508.339.2951, and we’ll pair you with an expert in Massachusetts home and auto insurance.