What Is Cyber Insurance and Why Is It Important?

Here's one type of insurance you should know about.

It's an unfortunate fact that the incidence of cyber attacks and identity theft seem to be on the rise. These incidents can often go hand in hand with credit card fraud.

In a recent Nationwide survey, 58% of respondents said they're concerned about falling victim to a cyber attack. And 20% of consumers say they've actually been a victim of some sort of cyber crime already.

It's for this reason that buying cyber insurance is so important. But many consumers may be in the dark about cyber insurance coverage and the benefits it offers.

What is cyber insurance?

Many consumers are familiar with products like auto insurance and life insurance. Cyber insurance is a type of protection meant to safeguard against cyber attacks. It's a product that both businesses and individuals may want to think about putting into place.

According to Beth Riczko, Nationwide's President of Property and Casualty Personal Lines, "Everyone can benefit from having cyber insurance. It is no longer a matter of if you will need it, but when will you need it?"

Many consumers don't realize how costly cyber attacks can be. If not addressed properly, cyber crimes can result in consumers having to pay for things like fraudulent credit card charges. Plus, cyber crimes can result in credit score damage for consumers. When this happens, it can impact their ability to borrow money affordably.

Cyber insurance can not only try to help prevent cyber attacks, but just as importantly, aid in the recovery process once they happen. That allows consumers to move on more quickly and potentially minimize things like credit score damage.

What's the difference between cyber insurance and identity theft protection?

There are different steps you can take to protect your identity, and putting cyber insurance into place is one of them. Or, to put it another way, cyber insurance is a means of protecting one's identity.

As Riczko explains, cyber insurance protection can vary depending on the type purchased. However, she says, "Nationwide's ID Theft product includes many cybersecurity protection features, including Anti-Ransomware, DataScrambler®, and Phishblock®, personal cyber protection advice and guidance, data recovery and device clean-up assistance, and home interest security restoration."

Riczko goes on to say that Nationwide can help consumers who fall victim to cyber attacks and crimes by assisting them with the recovery process, too. That includes initiating creditor notifications of an attack, communicating with law enforcement on victims' behalf, and placing credit freezes for those who need them.

What should consumers know about cyber insurance?

Just as each auto insurance or life insurance policy has its own costs and features, cyber insurance can vary depending on the provider at hand. That's why Riczko says it's important to shop around when looking into cyber insurance to see what each policy offers and how much it costs.

Is cyber insurance expensive?

Some people put off buying products like life insurance because they worry about being able to afford it. But Riczko insists that cyber insurance does not need to break the bank.

"Nationwide's ID Theft product is very comprehensive and competitively priced," she explains. "For about $4 a month, customers can help protect themselves against identity theft and certain forms of cybercrimes. Talk to your insurance agent to find out which coverage would be best for you."