What is personal cyber insurance? Do I need it?

Everyone needs insurance at some point in their lives. Licensed drivers need insurance to operate a motor vehicle. Homeowners need insurance to secure a mortgage. Businesses need insurance in case their products/services cause damage. Doctors need insurance to protect themselves from liability in case a medical intervention goes wrong. 

More and more of our daily activities take place online, making us more vulnerable to cyber-attacks. Personal cyber insurance is fairly new to the insurance scene, which makes sense considering cyber-based crimes and identity theft are on the rise. In fact, over half of Canadians have experienced cybercrime at least once, and 2% of Canadians have had their identities stolen. 

The problem is only getting worse, which is why it’s important to learn about personal cyber insurance and consider whether it’s a good choice for you.

What is personal cyber insurance in Canada?

Personal cyber insurance in Canada is a type of coverage designed to protect individuals from the financial impact of cybercrime. This insurance helps cover costs associated with identity theft, online fraud, data breaches, and more. 

Personal cyber insurance also offers peace of mind by providing financial assistance for recovery processes like restoring personal data, notifying affected parties, and legal fees if needed.

Personal cyber insurance may also offer protection against cyber extortion, where criminals demand payment to restore access to your data or systems. It can also cover losses due to online scams and fraudulent financial transactions.

What does personal cyber insurance cover?

Personal cyber insurance in Canada provides essential coverage to protect individuals from various cyber threats. 

There are multiple different types of personal cyber insurance coverage, including:

• Identity theft – This covers expenses related to restoring your identity, such as legal fees and lost wages.
• Data breaches – This covers the costs associated with recovering and securing compromised personal data.
• Cyber extortion – This covers the costs associated with ransom payments and professional fees to resolve extortion threats.
• Online shopping fraud – This protects against financial losses from scams and fraudulent transactions.
• Cyberbullying – This is included in some policies to cover the costs associated with cyberbullying incidents.

Is personal cyber insurance worth it?

Yes. Cybercrimes are on the rise and personal cyber insurance can protect you from the costs involved. 

Here are some real-life scenarios where personal cyber insurance can protect you. Read about these situations and ask yourself – could this ever happen to me? 

The answer is yes.

Situation one: Your identity is stolen

Identity theft is on the rise, and it carries significant financial consequences, especially for those who don’t have personal cyber insurance. Identity theft is when someone uses your personal information to open credit accounts, personal cyber insurance covers the costs of restoring your identity.

Situation two: You’re the victim of a ransomware attack

We are all at risk of a ransomware attack, and many who keep valuable data on our personal networks would be willing to spend a lot of money to get that data back if it were ever held ransom. 

If you are targeted by ransomware and need to pay to regain access to your data, personal cyber insurance will often cover the ransom and the costs associated with negotiation and data restoration.

Situation three: You’re the victim of online fraud

If you fall victim to a phishing scam resulting in unauthorized bank transactions, personal cyber insurance helps recover lost funds and secure your accounts.

Does my home insurance cover cyber risks?

Most home insurance policies do not cover cyber risks fully. 

Home insurance typically protects against physical damage to your property and personal liability but doesn't extend to digital threats. Cyber risks, such as identity theft, online fraud, and data breaches, require specialized coverage like personal cyber insurance. You may, however, be able to add an endorsement onto your home policy for certain coverages like identity theft.

Personal cyber insurance vs. commercial cyber insurance

Personal cyber insurance and commercial cyber insurance both offer coverage for the financial impact of cybercrime, but they serve different purposes and a different customer base.

In summary, while personal cyber insurance focuses on individual protection, commercial cyber insurance is tailored for businesses to manage and mitigate risks associated with cyber threats that affect their operations and customer data.

Where to get personal cyber insurance in Canada

Not all P&C insurers offer personal cyber insurance, but as digital threats continue to grow across Canada, it's expected that more providers will begin to offer such coverage. Here are two examples of companies that currently offer specialized insurance:

Aviva Canada – Aviva offers personal cyber insurance endorsement (an add-on to your current home coverage). The insurer provides coverage against a long list of threats, including online fraud, computer attacks, home systems attacks, identity recovery, data breaches, cyberbullying, and cyber extortion. On top of that, the company provides dedicated support with their team of cyber response experts, along with additional coverage for well-being benefits (e.g. mental health counselling after a cyberbullying incident).

Wawanesa Insurance – For cyber insurance, Wawanesa also offers coverage as an addition to a personal policy. This includes coverage against common digital threats, including cyber attacks, cyber extortion, online fraud, and data breaches. You can also purchase cyber insurance for your business through the insurer.

The bottom line

Investing in personal cyber insurance is a smart choice to protect yourself from the financial toll of cybercrime. This insurance offers protection in many scenarios including identity theft, online fraud, ransomware attacks, and cyberbullying, ensuring you have the support needed to recover from digital threats.

As cyber risks continue to evolve, having personal cyber insurance can provide you with the peace of mind and financial security necessary to navigate the online world safely. 

Consider your digital habits and potential vulnerabilities to decide if this coverage is right for you.

Also read:

• E-commerce insurance: How to protect your online business
• Do I need insurance for my side hustle?
• The rise of AI and financial scams