The extortion emails were the first sign of what was to come.

Nearly four years ago, a client contacted us regarding unusual claims filed by insureds. When logging in to a personal home computer, a homeowner, was greeted by a frozen screen and a pop-up demanding thousands of dollars to unlock the computer. The homeowner was told that upon payment, they would receive the encryption key required to unlock the computer to access their data. Unfortunately, at the time, the incident was not covered within the insured homeowner’s policy and the insured didn’t know where to turn. Ransomware events like this led to the new Home Cyber coverages we see in the market today.

Extortion is now one of an array of coverages in a typical Homeowners cyber policy. As new threats continue to evolve, cyber coverage is expanding to address insureds’ needs. There is no Bureau option available yet, so the proprietary coverages vary. Still, there are some common elements that reflect the principal exposures of homeowners today.

When an insured buys Cyber protection, typically through an endorsement to the Homeowners policy, they should find coverage for the following:

• Cyber Attack - Helping the insured recover data and computer system damage from a cyber attack
• Breach Response Services - Notification and other services to comply with laws after another’s personal information is breached from your computer
• Cyberbullying - Professional assistance when online intimidation causes emotional distress to an insured
• Social Engineering Fraud - Loss from online scams tricking you to send money or information to a fraudster
• Extortion - Investigation and ransom payment to regain access to your system and files.

Many cyber insurance forms in the personal lines space also include Identity Theft protection. Since Identity Theft insurance products have been in the market for quite a while, some carriers opt to maintain that protection as is and simply offer Cyber as a separate cover. Either way the critical protection is provided. No doubt we will see more add-on features offered as these incidents continue to evolve.

Agents and insureds may ask if this additional coverage is really needed, at least in our current cyber environment. The exposure is there. Just think about the implications of these statistics:

• 41% of Internet users have shared passwords to online accounts with friends and family members.
• Ransomware on mobile devices has grown 250% in the past year.
• The FBI reported a 60% increase in fake email schemes aimed at stealing money or tax data.

Consumers are generally aware of cyber and phishing risks and try to distinguish genuine emails from fake emails. However, 30% of phishing emails in the U.S. are still opened, and 12% of those users click on infected links and attachments. When you think that all it takes is an inadvertent click on a link or falling prey to a valid-looking email, the exposure becomes real and frightening.

Even the best efforts and security awareness do not thwart all attacks. That is why Cyber insurance has evolved for homeowners, as it did for businesses.

Those early panic calls about ransomware and extortion demands were not the first or last cyber incidents affecting consumers. The insurance industry continues to respond, tailoring protection and services to meet the threats affecting homeowners today. To learn more about Cyber insurance for the home or business, please give us a call.