As digital payments and online services become part of daily life, individuals and families across India are facing a sharp rise in cyber fraud. Incidents such as UPI scams, identity theft, and account takeovers are no longer rare, and the impact often goes beyond financial loss. Cyber insurance is now being seen as a structured support system, not just a payout mechanism.
Common cyber frauds hitting individuals
Experts say most cyber fraud cases start with social engineering tactics. These include vishing calls, phishing links, and SIM-swap attacks that trick users into giving away sensitive information or losing mobile access.
Rushik Patel, associate director at EDME Insurance Brokers Ltd., says, “Victims are frequently tricked by fake refund requests or lose mobile network access after SIM cloning. Fraudsters then move money out using OTPs, with losses ranging from Rs 20,000 to several lakhs. Recovery is difficult without insurance, especially if reporting is delayed.”
Ankit Gupta, business head for cyber insurance at Policybazaar, adds, “A common example is a UPI phishing scam. Victims share OTPs under pressure and lose amounts between Rs 20,000 and Rs 2 lakh in minutes. SIM-swap frauds can drain accounts over hours, with banks taking months to refund, if at all.”
Other frequent threats include fake social media profiles, online stalking, fraudulent loans, and compromised e-commerce accounts. Vibu Dwivedi, vice-president at Anand Rathi Insurance Brokers, notes, “Cyber fraud constantly puts individual privacy at risk. Incidents range from identity theft to fraudulent transactions and cyberstalking, often requiring FIRs and police intervention.”
What cyber insurance usually covers
Many policyholders assume cyber insurance covers all online frauds, but experts caution otherwise. Common exclusions include voluntary sharing of OTPs or passwords, known prior incidents, investment losses, and intentional acts. Delayed reporting or missing documents can also lead to rejected or reduced claims.
Rahul Jajoo, advocate at Delhi High Court, explains, “Coverage is contingent on prompt reporting to banks and police, maintaining minimum digital hygiene, and adherence to policy terms. Claims are frequently denied due to delayed notifications or social engineering exclusions.”
More than money: recovery support
Cyber insurance often includes legal help, IT forensic support, identity restoration, counselling, and coordination with banks. Aashwyn Singh, senior associate at SKV Law Offices, says, “Professional case managers coordinate with banks and credit bureaus, accelerating recovery and reducing stress. For many, these services matter more than the payout itself.”
Some policies also cover wage loss, reputation management, and device security guidance, helping users regain confidence in digital systems.
Who should consider cyber insurance
Experts suggest cyber insurance for anyone who frequently uses UPI, digital wallets, or shared devices. Coverage should match transaction volumes and exposure, as under-insurance can leave users vulnerable.
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