Previous Year Question
In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits?
Cost of restoration of the computer system in case of malware disrupting access to one’s computer
Cost of a new computer if some miscreant wilfully damages it, if proved so
Cost of hiring a specialised consultant to minimise the loss in case of cyber extortion
Cost of defence in the Court of Law if any third party files a suit
Select the correct answer using the code given below:
1, 2 and 4 only
1, 3 and 4 only
2 and 3 only
1, 2, 3 and 4
Correct Answer: B
Detailed Solution
Cyber Insurance does not necessarily protect individuals only against direct financial losses caused by online fraud. Subject to policy terms, it may also cover expenses relating to restoration, professional assistance and legal liability following a cyber incident.
Statement 1 is correct.
Malware, ransomware or another cyberattack may disrupt access to a computer system or the data stored in it. Cyber Insurance may generally cover expenses incurred for:
removing malware from the system;
reinstalling the operating system and software;
recovering damaged or destroyed data; and
obtaining assistance from cyber-forensic specialists.
Such protection concerns restoring the digital system and data as closely as possible to their condition before the cyber incident.
Statement 2 is incorrect.
Wilful physical destruction of a computer by a person ordinarily constitutes physical damage rather than cyber risk. Such damage may be covered under electronic-equipment, home or another property-insurance policy, but the complete cost of a replacement computer is not generally covered merely under Cyber Insurance.
A policy may cover restoration of data or software damaged by a cyberattack. That does not automatically amount to providing a new computer for physically damaged hardware.
Statement 3 is correct.
Cyber extortion may involve criminals demanding money through ransomware or threatening to disclose private data. The insured person may require assistance from cybersecurity, forensic, legal or crisis-management specialists.
Subject to policy conditions and prior approval from the insurer, the reasonable cost of hiring such a specialised consultant may be covered. The purpose is to contain the incident and minimise the potential loss.
Statement 4 is correct.
If a cyber incident exposes a third party’s confidential information or causes that person financial loss, the third party may initiate legal proceedings against the insured.
Cyber Insurance may cover third-party-liability expenses such as advocates’ fees, the cost of legal defence and approved settlements or compensation.