UPSC Prelims 2020 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 ?

1. Cost of restoration of the computer system in case of malware disrupting access to one’s computer
2. Cost of a new computer if some miscreant wilfully damages it, if proved so
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4. Cost of defence in the Court of Law if any third party files a suit
   
   

Select the correct answer using the code given below :

Explanation:

Cyber Insurance Policy in India:

• The policy covers a wide range of costs in case of cyber frauds.
• The coverage offers protection in the event that an insured person's bank account, credit card, debit card, or mobile wallet are compromised due to a cyber-incident or hacking by a third party.
• The policy covers data restoration cost due to malware attack and hence the cost of restoration of computer system. So, point 1 is correct.
• It provides protection for extortion loss as a result of cyber extortion threat and provides expense to prosecute perpetrators. It also covers the consultation fees to minimise the losses. So, point 3 is correct.
• It covers cost incurred during the prosecution process and defence in case any lawsuit is filed by the third party. So, point 4 is correct.
• The policy does not cover any deliberate, dishonest or reckless act committed consciously by any person who was a responsible person of the insured at the time of such act or omission. Hence, no defence costs would be covered in this case. Thus, cost of a new computer if some miscreant wilfully damages it, if proved so, would not be covered. So, point 2 is not correct.

Therefore, option (2) is the correct answer.

Relevance: In October 2020, IRDAI set up a committee for cyber liability insurance.  

Subject: Economics | Miscellaneous(eco)