Originally published at: Add Protection from Scammers with Cyber Insurance - TidBITS
Americans lost $12 billion to fraud in 2024, with a significant portion coming from phishing, smishing (SMS phishing), and social media trickery. Individuals have been tricked into handing over financial information, sending cryptocurrency, and even handing over bags of cash in a parking lot.
In his Web Informant newsletter, David Strom recently highlighted something we’d never considered: “personal cyber insurance,” which offers repayment of some losses and reimbursement or coverage for certain recovery services. Many homeowner policies allow cyber insurance to be added as a low-cost endorsement (extra coverage), and policies can also be purchased a la carte for renters or if your insurer isn’t price competitive. Prices range from about $25 to $300 a year, depending on the insurer and level of coverage you choose.
David pointed out that a friend of his recovered $25,000 from their insurer out of $30,000 stolen in a “pig-butchering” scheme, in which people are duped through online friendships or romantic enticements into making what they think are recommended investments. In reality, no investment exists, and the money is just stolen.
These policies often cover some or all of the costs associated with various types of attacks, such as data destruction or “cyber extortion,” including ransomware. An insurer might reimburse you for data recovery or hire a professional to negotiate with a data blackmailer.
For fraud, consider whether the policy provides reimbursement for direct theft of assets, such as when someone obtains your credentials and steals money from your accounts, but your financial institution doesn’t recompense you. In addition, look for coverage of pig butchering and similar scams, in which you are deceived into transferring money, like David’s friend.
David points to Nerdwallet’s roundup, which lists some insurers that provide endorsements on existing policies and standalone insurance options. If you own a home or have renter’s insurance and are satisfied with the company you use, I recommend contacting your agent or the company to inquire about an upgrade. Otherwise, you need to purchase a standalone policy. Chubb may be a good choice, given what it includes in coverage. The company offers policies directly and through its Blink subsidiary.
I had never thought about insuring myself against cyber fraud despite having fallen victim to several cyber attacks against my systems over the years, including an incident where someone installed Bitcoin mining software on one of my servers. Fortunately, my restoration costs were merely my time. My spouse and I use State Farm Insurance, which offers a $25-per-year add-on policy with a total annual payout of up to $50,000 across various categories. I’ve asked our agent to upgrade our policy. It feels like a small hedge against a lot of possible worries.
We all hope we are clever enough to recognize malicious interactions, but criminals are becoming ever better at exploiting our worst fears, triggering our panic responses, and reeling us in. As I discussed in “How To Avoid AI Voice Impersonation and Similar Scams” (25 January 2024), even the savviest among us could be fooled long enough if we believed a loved one was calling because of dire circumstances. Notably, some phishing attacks are becoming harder to identify—Troy Hunt, the creator of the Have I Been Pwned data breach tracker website, recently fell prey to a highly sophisticated phishing attack partly due to being jet-lagged. If it can happen to a security expert like Hunt, it can happen to anyone.