Is cyber insurance worth it for individuals as online fraud rises?

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Cybercrime has become extremely common and more and more Indians are finding themselves vulnerable. Some of the ways it may affect you is through UPI-based scams, phishing links and hijacked social accounts. While banks do have some liability policies in place that allow for retraction of unauthorized expenditure, you could still lose money, information and most importantly, your peace of mind in such cases. This is where cyber insurance comes in: a policy protects you if you get duped online.

What it really addresses

Most personal cyber insurance policies provide coverage in the event of phishing, SIM-swap, card and UPI-related fraud, identity theft, and even cyberstalking or reputational harm in case your accounts get hacked. Premiums can be as low as ₹500-₹1,000 annually for coverage up to ₹1 lakh, and increase as per the amount insured.

But there are catches

There are some tricky exclusions though. For example, many policies won’t cover losses if you shared your OTP or password (which scammers often trick you into doing). Some also require you to file an FIR before processing a claim, which can be a headache. And claim settlement isn’t always smooth as insurers can reject claims citing “negligence.” So, while the product sounds promising, the fine print really matters.

Who should seriously consider it

If you have an active online transaction profile, like you invest via apps, make purchases through websites, or handle your elderly parents' accounts, cyber insurance can be comforting for you. It is fairly affordable and can be a huge safety net in times of strife. However, if you are mostly vigilant online and your activity is low, then relying on your bank’s fraud liability policy may be enough.

Frequently asked questions

1. Is money stolen in UPI scams covered under cyber insurance?

Yes, all policies insure unauthorized transactions via UPI, net banking, or cards — unless you have not surrendered sensitive information such as OTP voluntarily.

2. Is the process of making a claim tedious?

Typically, you need to inform the insurer fast, open a police case, and submit documents. It is laborious, but is getting better as the need is increasing for such products.

3. Is cyber insurance necessary if I am already insured by the bank?

Bank accounts have limited liability as per RBI guidelines, but the coverage is not absolute and often fails when you have been duped into providing information. Cyber insurance can plug such gaps, particularly among high-intensity users.