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A standard part of home or office contents insurance is making sure you use a lock from a list of approved manufacturers, and then ensure that the lock is actually engaged when you’re absent. Enabling other security mechanisms such as alarms is also typically required.
This seems entirely reasonable and simple common sense: if you leave a building unlocked and your belongings are stolen, it’s your own fault – you were negligent.
It’s not quite the same when it comes to cyber theft.
Even though you can purchase insurance to cover you against the risks of cyber attack, hacking, ransomware and data loss, the policies are much vaguer when it comes to understanding your responsibilities.
In a physical contents policy, it is sufficient to use the term “locked” to describe the state the building must be in to be considered sufficiently protected. When applying for the policy you will be asked if there is an alarm and in theory the presence of one should reduce the premium. The same isn’t the case when applying for a cyber insurance policy. I think it should be.
Basic security steps #
There are two steps you must take to secure your online accounts:
- Use a password manager, with unique passwords for every online account that are at least 12 characters in length (as of Jan 2018, this will change over time).
- Use 2 factor authentication using a TOTP app such as Google Authenticator, not SMS. Or even better, use a security key.
Having the same password (or a small number of passwords) for your online accounts is the single biggest reason why account compromise is so frequent. A single breach of any online service will reveal your password for everything else, something which happens on a regular basis.
Without a password manager, this becomes difficult to achieve, especially since you will want to use a random selection of numbers, letters and special characters. The main reason to use a passphrase with combinations of words is to make it easier to remember. Using a password manager means you don’t even have to remember anything except the single master password, can protect against phishing because auto-fill matches are based on URL patterns and you can quickly enter credentials with keyboard shortcuts.
You have to expect that your password will be leaked (or possibly guessed given sufficient compute power), and so that is why having 2 factor authentication is so important. This is a great example of having layers of security so a breach of one type of protection is mitigated by another.
If you don’t use both of these “techniques” for at least your email and ideally for every account, you are negligent. It’s the same thing as leaving your property unlocked.
Applying this to cyber policy insurance #
Just implementing these security measures significantly improves your security and should really be a standard part of applying for cyber insurance just like asking about alarm systems is for contents insurance. Not using either should therefore increase your premium.
But given the number of people who are still acting negligently with regards their own cyber security, perhaps it’s not yet been considered in the risk analysis for insurers. Maybe so many people don’t bother with proper security that it doesn’t show up in their premium modeling yet.
Or maybe it does. If you look closely at the insurance wording, you might find something like this:
What is not covered – pre-existing problems: anything likely to lead to claim, loss, breach, privacy investigation, illegal threat or interruption which you knew or ought reasonably to have known about before we agree to insure you.
Source: Hiscox Cyber Policy
This is vague enough to give the insurer scope to exclude many claims for poor security practices – “ought reasonably to have known about” easily covers not using the two security techniques above. There is enough advice online and from official government channels saying the same thing (2FA and password managers) for this now to be considered reasonable knowledge.