Online and digital payments have become increasingly popular in India with the rise of credit cards, debit cards, and UPI. UPI has revolutionized payments in the country and has surpassed credit and debit cards in popularity due to its ease and convenience.
To protect yourself, it is important to take steps to secure both your cards and digital financial assets. But even with the best precautions, cyber-attacks can still happen, resulting in financial losses. That’s where cyber insurance comes in. It can provide coverage for losses resulting from cyber-attacks, such as stolen funds or identity theft.
Considering the growing importance of digital payments and the increasing risk of fraud, would you be interested in purchasing a cyber insurance policy to protect yourself and your finances?
In this post, let’s consider a cyber insurance product from HDFC Ergo.
What Does HDFC Ergo Cyber Sachet Insurance Cover You Against?
Cybersecurity insurance is not just about indemnifying you for unauthorized transactions on your bank accounts and cards. It goes much beyond. For instance, if a hacker gets access to your system through malware, you may have to incur cost in removing malware from the system and getting access to your data. Or even replacing the device. Or you may have to incur legal costs due to liability or for claiming damages from a third party. A cybersecurity insurance can help you there.
I list only the prominent (not all) insured events of the HDFC Ergo Cyber Sachet Insurance plan below:
- Unauthorized digital transactions: From your bank account, credit/debit cards or digital wallets due to phishing, vishing, and email spoofing or any other reason.
- Unauthorized physical transactions on your credit/debit cards and ATM withdrawals. This can happen if you are a victim of card skimming.
- Identity theft (a fraudster gets a credit card issued in your name using forged/unauthorized documents and you get the credit card statement from the bank). This is important because there is little you can do to prevent this. Yes, you can be careful with your documents and data but given how things work, you are required to submit copies of all kinds of documents to everyone.
- Online shopping: You make an online purchase, but the item is never delivered to you. Quick tip: Don’t use credit/debit cards on websites you do not trust.
- Data Restoration and Malware Decontamination: Reimbursement of cost to restore data and cleanup of device after a malware attack.
- Replacement of hardware: If replacement is cheaper, then the device will be replaced.
- Smart home cover: If the malware affects smart devices such as Alexa.
- Cyber Bullying, stalking, and loss of reputation.
How Much Cover Do You Get and What Is the Premium?
You can select Sum Insured between Rs 10,000 and Rs 5 crores. The process flow did not allow me to select more than Rs 10 lacs.
You can choose separate Sum Insured for each section (say Rs 1 lac for unauthorized transactions, Rs 2 lacs for Identity theft). I could not figure out how to select different covers for different events.
You can choose a single Sum Insured that can be used for all the sections (insured events).
The premium will depend on the Sum Insured chosen and the extent of coverage. Does not depend on the age of the buyer. You can also add your family members to the same plan. For a family of 4, the premium for Rs 5 lacs cover with all the covers (except unauthorized physical transactions and cyber-extortion) is ~Rs 3,500. Not too expensive.
All your devices (mobile, laptop, tablet, smartphone, smart home devices etc.) will be covered under this plan for the above premium.
What Is the Process for Making a Claim?
You must inform the insurer immediately about the occurrence of an insured event. In some cases, you must notify the bank about the fraudulent transaction within specified time and/or lodge a police complaint.
Should You Purchase This Insurance Plan?
I do not see much wrong in pure risk covers. A cybersecurity insurance plan is one such product. You can argue about the merit of buying such covers provided you follow safe internet and digital payment practices. But I am sure there are many consumers who can find merit in such a product.
By the way, you may be a victim even when you are not at fault. Identity theft is one such instance. Someone takes a credit card or a loan against your name. You get the bill for payment. Given the way things work, you must have already shared your IDs with many people in the past. Remember the last time you checked into a hotel and had to share an id proof. All those documents can be misused.
And these plans are usually not too expensive either.
However, I do not have any information about the claim settlement related data for such policies. Or any positive or adverse feedback about claims experience in such plans. My worry is that there is so much subjectivity in everything and I worry this can go against you. With my limited knowledge, it is not easy to prove what’s an authorized transaction and what’s an unauthorized transaction.
Hence, you will have to use your judgement here. Do read the terms and conditions of the insurance plan (and not just the brochure) to evaluate the coverage and the utility for you.
Buying cyber insurance does not mean you can let your guard down. Why?
Because a cyber-insurance plan covers you only up to a certain limit. You do not have infinite coverage. If you are not careful, your losses can be much bigger. Your cyber-insurance plan won’t cover the excess losses.
Moreover, insurance always has fine print. And that can sometimes lead to surprises. For instance, only unauthorized transactions are insured. If you authorize a payment (by mistake) by entering your UPI PIN or sharing your credit card CVV, and OTP, that won’t be covered. Yes, that may fall under vishing, which is covered but I believe it won’t be easy to convince the insurer that you were scammed.
Additionally, the bank can compensate you for financial losses but it is difficult to put a price tag on the mental agony that such incidents can cause.
HDFC Ergo is not the only company that has cyber insurance plans. You can check out offerings from other insurers, understand the coverage, and decide accordingly.
- HDFC Ergo Cyber Sachet Insurance-Brochure
- HDFC Ergo Cyber Sachet Insurance-Policy Wordings
- How to prevent a credit card fraud?
- How to reduce your liability in case of a credit card/digital payments fraud?
- Do you know about these safety features in your credit card?
- Set transaction limits in your credit card to prevent fraud