In this digital age where everything moves so fast, cyber threats have ceased to be the concern of IT departments alone. Whether it is startups or large corporations, all types of businesses are vulnerable to cyber risks. To counter this, Cyber Insurance is emerging as an essential shield to Indian businesses. Nevertheless, a Cyber Insurance Policy, with its fair share of insurance jargons, may seem like a foreign language at times.
This Cyber Insurance Glossary for India will help you break down the jargon. Whether you are a business owner, compliance manager, or just cybersecurity curious, this guide to cybersecurity insurance terms will help you understand the key terms and simplify the language used in policies. This will also help you make informed decisions.
To get started, here are the most important cyber insurance terms every Indian business should be aware of.
A. Core Cyber Insurance Terms
1. Cyber Insurance
A specially designed insurance plan that gives financial cover against losses that may arise due to cyber-related attacks such as hacking, data breaches, and ransomware.
2. Insured
The person or entity that purchases the cyber insurance policy and is the one who is entitled to benefits under the policy.
3. Insurer
The insurance company that offers the cyber insurance policy.
4. Policy Period
The exact period within which the policy on cyber insurance is in force and provides insurance coverage.
5. Premium
The premium is the money paid by the insured to the insurance company to cover the insured against specified cyber perils, over a specified period of time.
B. Types of Cyber Incidents
6. Data Breach
Unauthorized access to, use of, or disclosure of sensitive, confidential, or protected data. This is one of the most regularly insured risks in cyber insurance.
7. Ransomware
A kind of malicious software (malware) that locks systems or encrypts files until a ransom is paid. A majority of the cyber insurance policies cover the ransom costs and the costs of recovery.
8. Phishing
Scams to deceive a person in order to get personal or financial data, usually carried out through false emails or websites.
9. Denial-of-Service (DoS) Attack
A malicious cyber attack that floods a system or a web site, rendering it inaccessible to users..
10. Business Email Compromise (BEC)
A targeted attack where attackers pose as high-ranking executives or suppliers in order to fool employees into sending money or data..
C. Coverage-Related Terms
11. First-Party Coverage
Coverage of direct losses incurred by the insured (e.g. recovering the system, restoring data, paying ransom, etc.).
12. Third-Party Liability Coverage
Cover liability claims by third parties- including customers or partners- as a result of the cyber incident of the insured.
13. Notification Costs
Costs incurred in notifying customers, vendors or regulators of a data breach
14. Reputational Damage
Coverage of the loss of goodwill or income as a result of reputational damage caused by covered cyberattacks or cyber threats.
15. Data Restoration Costs
Costs incurred in recovering, restoring or recreating lost or compromised data.
16. Business Interruption
Insurance cover on loss of revenue due to temporary closure or slowdown of operations as a result of cyber threats.
17. Extortion Payment
The payment made to hackers in an event of ransomware or other cyber related threats. Some Indian insurance companies restrict the amount and need police involvement.
18. Digital Asset
Any intangible property such as data, software, customer databases, and intellectual property that can be lost or damaged in a covered cyber event.
D. Legal and Compliance Terms
19. Regulatory Fines and Penalties
Coverage of fines or penalties imposed by Indian regulatory authorities as a result of non-compliance or data breaches.
20. Privacy Liability
Liability that may result on failure to safeguard personally identifiable information (PII) or sensitive personal data (as per laws like the DPDP Act, 2023).
21. Breach of Confidentiality
When unconsented proprietary or personal data is accessed or disclosed, resulting into legal consequences.
22. Cyber Liability
A general term that addresses the legal duties and responsibilities that can occur as a result of a cyberattack or data breach.
E. Risk and Threat Terminology
23. Zero-Day Exploit
A cyberattack that takes advantage of unknown software vulnerabilities, often hard to detect and mitigate in time.
24. Advanced Persistent Threat (APT)
A prolonged and targeted cyberattack where intruders gain continuous access to a system to steal data or cause damage.
25. Social Engineering
Manipulating individuals to gain access to systems or confidential data—common examples include phishing or baiting.
26. Brute Force Attack
A hacking method that uses automated tools to guess passwords or encryption keys.
F. Policy Limits and Financial Terms
27. Sum Insured
The upper limit the insurance company will pay as per the policy terms, on claims made against the policy.
28. Deductible
The percentage of the loss the insured has to pay out of his pocket before the insurer starts covering the loss.
29. Sublimit
A smaller limit earmarked under the main sum insured on certain covered risks, such as ransomware, PR expenditures, or forensics.
30. Aggregate Limit
It is the amount that the policy will pay out in total in case of all claims during the policy term.
31. Retention
Just like deductible, it is the amount of the loss that the insured is obligated to bear before the insurance comes into play.
G. Incident Management Terms
32. Incident Response
The measures that have been undertaken to contain, investigate and recover after a cyber event. Most Indian cyber insurance policies have come to offer 24×7 incident response support to policyholders.
33. Forensic Investigation
A thorough post-incident analysis to understand how the breach took place, what was compromised, and how to avoid its recurrence.
34. Threat Intelligence
Real-time information or data regarding new threats, vulnerabilities and the behavior of the attacker. Some insurers include it as an additional service
35. Crisis Management
Public relations and strategic communication activities that come after the breach to reduce reputational damage.
H. Policy Lifecycle and Claims
36. Proposal Form
The document that the applicants have filled in with details about their digital infrastructures and risk profiles to underwrite.
37. Underwriting
The mechanism by which the insurer calculates risk and determines the terms of coverage and premium.
38. Exclusion
Circumstances that are not included in the policy As an example, certain policies in India do not cover cyber warfare, willful actions, or preexisting vulnerabilities.
39. Claim Intimation
The official procedure of notifying the insurance company about an accident and an intention to make a claim.
40. Claims Settlement
The steps that the insurer undertakes to assess, authorize, and pay the claim amount.
I. Indian Cyber Law Context
41. Information Technology Act, 2000
It is the keystone legislation of India on digital communication, data protection, and cybercrime. In numerous cyber insurance claims, IT Act provisions are cited.
42. CERT-In
The Indian Computer Emergency Response Team, the government agency in charge of dealing with cybersecurity incidents. According to CERT-In rules, companies are required to report major incidents within 6 hours.
43. Digital Personal Data Protection Act, 2023 (DPDP Act)
The latest and most detailed data privacy legislation in India that requires data breach disclosure, user consent, and regulatory compliance.
J. Specialized Insurance Coverages in Indian Market
44. Cyber Crime Insurance
Takes a closer look at financial fraud, identity theft, and internet scams.
45. Personal Cyber Insurance
This insurance coverage focuses on protection of individuals against identity theft, cyberbullying, phishing and social media abuse.
46. Cyber Extortion Coverage
Specifically targeted at managing ransom-related claims and the costs thereof.
47. Cloud Coverage
Additional or integrated security of data stored in third-party cloud systems such as AWS, Azure, or Google Cloud.
48. Media Liability
Coverage of claims that are related to defamation, copyright infringement, or the publication of unauthorized content in the digital platforms.
K. Technical Infrastructure and Control Terms
49. Endpoint Detection and Response (EDR)
A security solution that constantly checks end-user devices to identify and react to cyber threats.
50. Extended Detection and Response (XDR)
A sophisticated model of security that combines various sources (moving to the cloud, endpoints, email, etc.) to detect threats.
51. Firewall
A digital security barrier that blocks inbound and outbound traffic according to preset rules.
52. Encryption
The act of encoding data to avoid unauthorized access. Essential to meet the requirements of Indian cyber insurance policies..
Important Pointers to Follow When Buying Cyber Insurance in India
- Evaluate your cyber risk exposure with respect to the sensitivity of data, IT infrastructure and size of business.
- Learn policy coverage and exclusions inside and out–particularly for ransomware, cloud breaches and third party vendor risks.
- Insist on post-incident assistance such as forensic analysis and PR response..
- Check on add-on services such as security audits or dark web monitoring.
- Compare insurers on the basis of their claim history, financial ratings, and reputation in the area of client servicing.
The Bottomline:
Cyber insurance in India is not a luxury anymore, it has become a need. As the cyber threats increase and the compliance requirements become more stringent, it is important to have an insurance policy that you can understand properly. This Cyber Insurance glossary offers the key terminology to help you navigate the maze of terms, to know what your policy covers and to ask the right questions when comparing providers.
Whether it is a data breach or ransomware or a business interruption, Cyber Insurance is your plan B when digital defenses are defeated. By having a good grasp of these insurance policy terms, you will be in a better position to not only protect your networks, but also your financial future.
