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 specialized consultant to minimize the loss in case of cyber extortion
Cost of defence in the Court of Law if any third party files a suit
(UPSC Prelims 2020)

Question

The correct answer is [B] 1, 3 and 4 only. Cyber insurance for individuals is a relatively new and evolving product in the Indian insurance market, designed to protect against digital risks rather than physical damage.

Restoration Cost (Statement 1 – Correct): Most individual cyber insurance policies cover the costs involved in restoring or reinstalling software and data that have been damaged or corrupted due to a malware attack or phishing attempt.
New Computer Cost (Statement 2 – Incorrect): Cyber insurance specifically covers \"intangible\" digital losses and liabilities. Wilful physical damage to hardware (the computer itself) by a miscreant is typically a matter for a standard Home Insurance or Asset Insurance policy, not a cyber insurance policy.
Specialized Consultant (Statement 3 – Correct): In cases of cyber extortion (such as ransomware), policies generally cover the expenses of hiring specialized IT consultants or \"cyber extortion experts\" to investigate the threat and minimize potential losses.
Legal Defense Costs (Statement 4 – Correct): If a third party sues the policyholder for defamation, breach of privacy, or data theft originating from the insured’s system, the policy covers the legal fees and defense costs incurred in a Court of Law.

Other common benefits include protection against Identity Theft, E-mail Spoofing, and Social Media Liability. The primary distinction to remember is that cyber insurance focuses on the data and the digital interaction, not the physical \"box\" or hardware.

GKToday Admin · Accepted Answer

1, 3 and 4 only The correct answer is [B] 1, 3 and 4 only. Cyber insurance for individuals is a relatively new and evolving product in the Indian insurance market, designed to protect against digital risks rather than physical damage.

Restoration Cost (Statement 1 – Correct): Most individual cyber insurance policies cover the costs involved in restoring or reinstalling software and data that have been damaged or corrupted due to a malware attack or phishing attempt.
New Computer Cost (Statement 2 – Incorrect): Cyber insurance specifically covers \"intangible\" digital losses and liabilities. Wilful physical damage to hardware (the computer itself) by a miscreant is typically a matter for a standard Home Insurance or Asset Insurance policy, not a cyber insurance policy.
Specialized Consultant (Statement 3 – Correct): In cases of cyber extortion (such as ransomware), policies generally cover the expenses of hiring specialized IT consultants or \"cyber extortion experts\" to investigate the threat and minimize potential losses.
Legal Defense Costs (Statement 4 – Correct): If a third party sues the policyholder for defamation, breach of privacy, or data theft originating from the insured’s system, the policy covers the legal fees and defense costs incurred in a Court of Law.

Other common benefits include protection against Identity Theft, E-mail Spoofing, and Social Media Liability. The primary distinction to remember is that cyber insurance focuses on the data and the digital interaction, not the physical \"box\" or hardware.

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