Phone Insurance in the Age of Ransomware: Protecting Your Digital Identity

Phones contain all of our information. They’re portable wallets, health journals, social networks, and work storage. So much of our digital life is available through our phones, which means they have become targets of ransomware attacks. With the advance of smartphones, cyberattacks no longer only target corporations, but individuals as well.

Modern phone insurance is evolving. Let’s go over how phone insurance can cover cyber threats, ransomware, identity theft, and more.

Understanding Ransomware on Mobile Devices

Definition

Ransomware refers to malicious software that locks a device or encrypts data until a ransom is paid. Of course, some criminals looking for a ransom will not surrender just because you pay it. They are the ones with leverage over you, be that your financial data, private photos, work secrets, or other confidential info.

How it spreads

Phishing: Phishing is the most common type of social engineering attack. Cyber criminals pretend to be someone trustworthy, like your friends or your bank. They send a harmless message with a link. After you open it, they can steal data from you or compromise your device. Phishing texts are a huge problem for phone users.

Malicious apps: These malicious apps appear on app stores in droves, pretending to be normal apps. But they are actually malware or unsafe apps that gain access to permissions that will hurt your phone. Root related software is a common source of these issues. Searching an app online using trusted sites can be a good way to help you avoid malicious apps.

Public Wi-Fi vulnerabilities: Joining public Wi-Fi is risky. Sometimes public Wi-Fi scammers will use fake names that seem trustworthy, like Starbucks or Free Plaza Wifi. Once you connect to their internet, hackers can easily compromise your privacy and data.

Impact

If your phone gets attacked by a malicious actor, the consequences could be severe. Common perils include:

• Loss of access to contacts
• Loss of photos
• Scammers getting access to your finances and banking apps
• Theft of your sensitive personal data

Trying to regain your identity or deal with ransomware can cost thousands or even millions of dollars, depending on what has been breached.

Why Phones Are Attractive Targets

Many people use their phones for banking and payment apps. Convenience has resulted in a big push for fast, tap-to-pay shopping across the world. Banking can also be done at the tip of your fingers. If you want to transfer money or check your bank balance, all you need to do is open your banking app on your phone. For account security, many sites and apps require you to have two-factor authentication (2FA) that is linked to your mobile number.

Criminals know that.

More people are using work for remote work or storing sensitive business data. Even when companies emphasize only using work, secure devices for work, employees still end up using phones for sensitive business.

Criminals know that.

Criminals have their eye on phones. Whether that means stealing the device itself, or by using malware to threaten what’s on the phone. A lot of ATMs also have card stealing devices on them, added by criminals.

Phishing links and scams are easier to notice on laptops and computers. But phones are often used for leisure. When you’re endlessly scrolling through social media or articles, clicking the wrong link is easy.

Phones are attractive targets for so many reasons.

The Hidden Costs of a Mobile Ransomware Attack

Financial

First, ransomware attackers demand you pay a ransom. Interestingly enough, many ransomware attackers do give you back access after you (or your company) pays the ransom. This is because if there is a reputation for ransoms not working, then the entire industry collapses–nobody would ever pay a ransom again. The ransom amount will depend on various factors, such as whether it’s targeted to you individually, targeting the company behind you, and if they know how much you can afford.

Unauthorized transactions can also be a consequence. Cyber criminals may access your banking app or other private apps, making transactions you do not approve of. Account takeovers become a risk.

Privacy

Mobile ransom attacks put your privacy at risk. Hackers will be able to access your personal photos and videos. They might threaten to spill your secrets until you pay up. This extortion is similar to ransomware.

Your documents and health records can also be at risk for being stolen. Documents that contain confidential or copyrighted material can be taken by malicious actors or competitors. This can pour years, if not a lifetime, of work down the drain.

Reputation

If a hacker takes over your social media, the hijacking can cause personal and professional damage. The reputational damage is tough and expensive to undo even if you hire PR professionals. But there are few choices after a hit to your reputation: you have to try and deal with it somehow.

Psychological

There is a psychological component of trauma after ransomware, data theft, and other cyber crimes. People may experience stress, fear, or loss of trust in digital tools. This arises a lot if you lose a lot of money because of cyber crime or if a criminal steals your personal photos and data.

How Phone Insurance Is Evolving

Traditional coverage

Before going over modern insurance types, let’s not forget what original phone insurance covers. Traditionally, phone insurance can cover:

Theft: Phone insurance covers thefts. Generally, you are expected to file a police report.

Loss: Some phone insurance policies cover losing your phone. Useful for those prone to losing their electronic devices.

Accidental damage: Non-intentional damage is covered by phone insurance. Some policies will cover liquid damage, which is particularly important if you plan on doing any adventure travel.

Modern add-ons for cyber threats

Some insurance companies like GEICO are now letting you pick add-ons or separate policies that cover cyber threats.

Data recovery and restoration costs: There may be a deductible and restrictions on what data recovery services are covered.

Reimbursement for fraudulent transactions: Many identity theft protection plans cover financial losses incurred due to fraud.

Identity theft protection services: Used to proactively protect you from identity theft and fraud. These services help with credit monitoring, scanning the web for your private information, and fraudulent activity detection.

24/7 cybersecurity support hotlines: 24/7 identity theft resolution hotlines can be called for expert help. You can talk with live agents, specialists, or AI helpers for assistance.

Coverage for ransomware-related expenses: This type of coverage is still rare. It covers cyber extortion and ransomware recovery expenses, such as legal expenses or cost of PR support.

Real-Life Scenarios

Let’s go over a few real-life scenarios in which ransomware insurance can be helpful.

• 1. A small business owner locked out of invoicing apps due to ransomware
• 2. An individual whose cloud storage linked to their phone is encrypted
• 3. A teenager’s social media accounts hijacked
• 4. A business loses access to its banking info and financial history

Phone Insurance vs. Cybersecurity Tools

Antivirus & anti-malware app weaknesses

Antivirus and anti-malware apps have had worse reputations in recent years. Before, every computer seemed to be paired with antivirus software, which had been seen as crucial. Nowadays, people have begun uninstalling antivirus apps because they seem to act like viruses themselves, advertising their services nonstop.

There are still high quality phone security apps, but they don’t reimburse losses.

VPNs and password managers

VPNs are highly recommended, especially if you plan on traveling. They provide you with an extra layer of protection, hiding your activity from potentially malicious actors. Password managers can also help with 2FAs, preventing others from accessing your accounts easily.

These apps can reduce risks but can’t pay for the recovery of stolen funds and ransomware. Cyber insurance aims to provide financial safety nets and recovery services after an attack. Businesses might be required to notify partners and consumers of data breaches or ransomware, which can be costly.

What to Look for in a Cyber-Aware Phone Insurance Policy

Explicit coverage for cyber incidents

Phone insurance plans can say they’re comprehensive, but that doesn’t necessarily mean they cover cyber issues. Hardware coverage is the norm. You need to try to obtain a device insurance policy that covers data theft, ransomware, and other cyber risks.

Support for identity restoration and monitoring

Identity fraud is everywhere. A lot of people have their identities or financial information stolen. Criminals are using their credit cards or identities to buy things, borrow money, and make serious life choices–avoiding the consequences by using other people’s identities.

A cyber-aware phone insurance policy will provide assistance for identity fraud by supporting identity restoration or fraud alert software.

Policies that include ransomware assistance and recovery

Some device insurance plans include hotlines and financial assistance for ransomware attacks. They can help you decide what the best next steps are for your situation. The policy can also cover expenses related to ransomware response and recovery.

Bundled family or business options for multi-device households and teams

Do you have multiple devices or a family with other phones? A phone insurance bundle or multi-device insurance plan can be very useful and economically efficient.

The Future of Phone Insurance in a Cyber-Threat World

Growth of AI-driven fraud detection and proactive alerts

Fraud detection has been continuously advancing. What used to be a pain to prove is now much easier as geolocators and financial habits have become easier to track. You may have even received a call or notification from your bank/credit card before, asking you if a purchase is legitimate or identity fraud.

AI is of course joining the fray of detecting fraud and other security issues faster. Machine learning is able to learn from massive datasets of fraudulent and secure transactions, figuring out key patterns.

Integration with crypto wallet insurance as ransomware increasingly demands crypto payments

Crypto insurance is hard to find. Since its inception, cryptocurrencies have had a bad reputation for being harder to keep safe than other investments.

Expansion of global coverage

Cyber crime knows no borders. Travel insurance is used to cover international incidents, such as medical expenses and trip interruptions. Specialized travel insurance, like K&R insurance, can even cover kidnappings and ransoms. It makes sense for phone insurance to extend and start covering international cyber crime since everyone is bringing their phones with them when traveling abroad.

The possibility of on-demand, pay-as-you-go cyber insurance

On-demand insurance is becoming more popular. It started out in the auto insurance industry, where GPS locators make sense. Based on your car usage and location, you would be paying different rates and/or having different degrees of coverage. Travel insurance is also adopting on-demand, usage-based insurtech in recent years.

In the future, it is possible for phone insurance products to also adopt pay-as-you-go, on-demand models. Cyber phone insurance can be tied to high risk scenarios, such as when you’re traveling abroad or using public Wi-Fi.

Conclusion

Ransomware has become an insidious threat to individuals and companies. You can get locked out of your own personal accounts and extorted, or lose control over your digital identities.

Phone insurance and cyber insurance are useful for protecting your digital life, on top of good cybersecurity habits like never clicking suspicious links and keeping your apps updated. Check out our ranked list of the best modern phone insurance companies to learn more.