Table of Contents
What is cybercrime?
Cybercrime is any type of crime perpetrated with a computer or network. Common cybercrimes include:
- Spreading malware, e.g. viruses and spyware
- Identity theft
- Intellectual property theft
- Data breaches
- Ransomware / online blackmail
- Online fraud
- Cyberbullying (in some situations)
Cybercrime is extremely common. If you’ve ever gotten a virus or had your password leaked in a data breach, you’ve been a victim of cybercrime.
Does renters insurance cover cybercrime?
No, renters insurance doesn’t usually cover cybercrime.
Most renters insurance provides named perils coverage, which means your provider will only reimburse you for losses caused by events that are specifically listed in your policy. In the insurance world, these events are known as covered perils.
Cybercrime isn’t listed as a covered peril in most renters insurance policies, which means that your insurer won’t pay for it in any way. They won’t reimburse you for any data you lose or pay for a replacement computing device (if, for example, a cyberattack renters your laptop unusable and you have to get a new one).
Does renters insurance cover cryptocurrency?
Renters insurance doesn’t usually cover cryptocurrency, such as Bitcoin, Ethereum (Ether), or Dogecoin. This is because renters insurance doesn’t cover data breaches or most other disasters that could result in the loss or theft of your cryptocurrency. In other words, if your crypto is stolen, your provider won’t cover it.
If you somehow lose your coins to a peril that renters insurance does cover, it’s possible your provider will partially reimburse you for them, but you shouldn’t count on that.
When does renters insurance cover cryptocurrency?
To access your cryptocurrency, you need to use a “key” — a 256-bit number that proves that you own it. If your cryptocurrency keys are all destroyed by a covered peril, it’s possible your provider will cover the loss.
For example, if your Bitcoin keys are stored on your hard drive and it’s destroyed in a fire, your provider might reimburse you for the effective loss of your Bitcoin, because fires are a covered peril in renters insurance.
Limitations on coverage
However, even if your coins are covered, your provider will probably treat them as either cash or securities. That’s bad news, because renters insurance covers cash and securities up to a much lower limit than the rest of your things. Many policies provide just $200 in coverage for cash and $1,000 for securities. Either way, there’s virtually no chance that your insurer will cover your crypto up to its full market value.
It’s also possible your provider will decline to cover your loss entirely. Cryptocurrency is still relatively new, and there’s no industry-wide consensus on how insurers should handle it.
The takeaway is that you shouldn’t rely on your insurer to cover your stolen Bitcoin. If you’ve decided to invest in crypto, keep multiple backups of your wallet in a safe place. That means storing them offline — nothing that you keep online is really safe, including any funds that you store in an online crypto exchange.
How to get cybercrime coverage with a renters insurance rider
Many insurers offer renters insurance riders (optional additions to your policy) that cover different types of cybercrime. These riders are variously referred to as:
- Cyber event riders
- Personal cyber insurance riders
- Cyberattack insurance riders
Not all insurers offer cyber insurance riders. State Farm offers them (we purchased their cyber insurance rider when we wrote our State Farm renters insurance review), and several smaller insurers do as well, including AIG, Arbella, Chubb, Mercury, and PURE, but we’re not aware of any other major insurers that offer them.
What does a personal cyber insurance rider cover?
Every insurer provides slightly different coverage, but cyber insurance riders often include the following:
Identity theft coverage and contingent credit monitoring
This will reimburse you for the costs of restoring your identity. This type of coverage is very common, and even if your insurer doesn’t offer a cyber insurance rider, they might offer it via a standalone identity theft restoration rider.
If you have identity theft coverage, your insurer will usually pay for around $10,000–$15,000 of identity restoration expenses. These may include attorney and notary fees, the cost of hiring a credit repair company, and potentially your lost wages if you have to take time off work while your identity is being restored.
Your insurer won’t pay any fraudulent credit card bills, but you don’t need them to — you’re not responsible for those bills anyway. Your insurer will, however, explain to your credit card company and any other interested parties (such as retailers) that you weren’t the one who racked up those debts and you can’t be expected to pay them.
Your insurer will also pay for any expenses that were a direct result of the theft, usually up to a limit of $50,000, and will provide 12 months of credit monitoring services in case the perpetrators make further attacks on your identity.
Online fraud coverage
Identity theft isn’t the only kind of fraud you have to worry about. If somebody defrauds you in another way — for instance, if they sell you something on an online marketplace and then never send it to you — your provider will cover your financial loss (up to a limit of $50,000 in most policies).
Most cyber event riders cover:
- Forged checks
- Fraudulent sellers in online marketplaces
- Unknowing acceptance of counterfeit currency
- Stolen bank funds
- Unauthorized use of credit cards or checks
- Phishing schemes (i.e. when a website tricks you into giving them sensitive information)
Cyber attack coverage
If criminals attack your system, either via malware or by exploiting a software vulnerability, your insurer will cover the costs of restoring your data and repairing your device to a maximum of around $15,000.
This is the type of coverage that protects you against data breaches, which makes it crucial if you store a lot of sensitive information on your devices. However, most cyber insurance riders don’t cover data or hardware used for business purposes, so if you run a home-based business, you might need a dedicated insurance policy to protect it from cybercrime. We discuss this in more detail at the end of the article.
Cyber extortion coverage
Cyber extortion coverage is mainly intended to protect you from a type of malware called ransomware, which encrypts your files and threatens to publish, delete, or permanently block access to them unless you pay a ransom.
If you’re the victim of a ransomware attack, your insurer will pay for you to get professional assistance from a security expert to recover your files.
If they’re unable to do so — which, depending on the ransomware attack, is possible — your insurer might also reimburse the ransom cost, although the expert you hired will have to affirm that you have no other options. Be aware that paying the ransom doesn’t guarantee that the attackers will actually restore your data.
Cyberbullying coverage (sometimes)
Some cyber insurance riders offer cyberbullying coverage. If you or someone in your household is the victim of online harassment, your insurer will cover your associated costs. These can be surprisingly extensive, and can include:
- Temporary relocation if the online harassment campaign makes it unsafe to stay in your home
- Private tutoring if you have to pull your child out of school
- Lost wages if you have to take time off of work
- Legal expenses
- Therapy (not provided by all insurers)
Interestingly, cyberbullying insurance also sometimes covers your legal liability if someone in your household (like your child) happens to be the bully.
Cyberbullying coverage is rarer than the other types of insurance listed above. For instance, State Farm doesn’t include it in their cyber event rider. However, several smaller insurers do offer this coverage, including Chubb.
Cyber insurance — an alternative to a cyber event rider
As mentioned, standard cyber event riders do not cover data used for business purposes.
If you need to insure your home-based business, or if you have an unusually large amount of sensitive personal data that you need to insure, you can buy a dedicated cyber insurance policy. This type of insurance covers your losses due to cybercrime up to much higher amounts (at least $1 million), and covers data that you use for your business. It will also cover any legal liability you incur if your customers’ data is compromised in a data breach.
Cyber insurance is much more expensive than renters insurance, with an average cost of about $1,500 per year. This type of insurance is overkill for most private individuals, but it’s invaluable if you run a small business that handles a lot of sensitive data.
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