In today’s digitally driven Indian economy, data is no longer just a business asset—it’s the very backbone of every enterprise. From startups to tech giants, organisations rely heavily on data to run operations, serve customers, and stay competitive. But what happens when that data is lost, corrupted, or held hostage by a cybercriminal? That’s where Data Restoration and Recovery Coverage under Cyber Insurance steps in as a lifeline.
The cyber risk landscape in India is evolving rapidly. As per CERT-In data from 2023, India recorded over 1.3 million reported cybersecurity incidents, including phishing, website intrusions, and ransomware attacks. For businesses of all sizes, data-related cyberattacks have become a top concern.
While cybersecurity tools such as firewalls and antivirus software are important, they are not foolproof. When preventive defences fail, Cyber Insurance with data restoration and recovery coverage acts as your financial and operational safety net. It ensures that even after an attack, your business can bounce back quickly—with your valuable data intact. This coverage has indeed moved from being a “nice-to-have” to an absolute necessity.
In this blog, we will explore everything you need to know about data restoration and recovery coverage under Cyber Insurance in India—what it means, what it covers, who needs it, and how it can save your business from financial and reputational disaster.
What is Data Restoration and Recovery in Cyber Insurance?
Data restoration and recovery coverage refers to the specific component of a Cyber Insurance Policy that reimburses the insured business for the cost of restoring or recovering lost, damaged, or corrupted data after a cyber event.
It’s essential to differentiate this from general IT backup services or disaster recovery solutions. While those are proactive security measures, data restoration coverage kicks in after a data-related incident has already occurred. It covers expenses associated with retrieving data from backups, re-creating lost data manually if necessary, and reinstalling affected systems or software.
This coverage is an operational cushion—designed to minimise downtime, prevent data re-creation costs from ballooning, and support rapid business recovery.
Why Data Restoration Coverage is Critical for Indian Businesses
India has become a prime target for cyberattacks due to its massive digital adoption. With the rise of digital payments, e-commerce, cloud services, and remote work, the attack surface for cybercriminals has expanded significantly.
Let’s look at some compelling reasons why data restoration and recovery coverage is indispensable for Indian businesses:
- Growing Threat of Ransomware
Ransomware incidents in India are among the highest in the Asia-Pacific region. Attackers lock businesses out of their data and demand hefty payments in cryptocurrency. Without proper backups or insurance, recovering data is almost impossible. - High Cost of Downtime
Even a few hours of data loss can cost lakhs—or crores—depending on the scale of operations. In retail, banking, logistics, and healthcare, data is the heartbeat. Data restoration coverage reduces downtime by funding quick recovery. - Regulatory Pressure
With the Digital Personal Data Protection Act, 2023 now enacted and existing provisions under the Information Technology Act, 2000, Indian businesses have legal obligations to safeguard and recover user data. Failing to do so may attract penalties and lawsuits.
What Does Data Restoration and Recovery Coverage Typically Include?
Different insurers offer slightly varied scopes, but generally, a data restoration and recovery clause in a Cyber Policy covers the following:
- Restoration of Corrupted, Deleted, or Encrypted Data
Costs related to recovering lost data due to malicious attacks, accidental deletions, or unauthorised access. - Re-Creation of Data
If backups are unavailable or incomplete, insurers may reimburse the cost of recreating data manually or through forensic tools. - Labour and IT Support Costs
Wages or fees for professionals, including IT vendors or data recovery experts hired to bring systems back online. - Software and System Reinstallation
Reinstallation of business-critical applications, databases, or cloud environments if systems are compromised. - Forensic Investigation
Insurers often cover forensic services to analyse the breach, identify the cause of data loss, and provide guidance on restoring data safely.
Types of Cyber Incidents Covered
Here are the types of events typically triggering data restoration and recovery coverage:
- Ransomware Attacks
Hackers encrypt critical files and demand ransom. Insurers may pay for data recovery even if the ransom is not paid. - Insider Threats
A disgruntled employee intentionally deletes or tampers with company files. - Accidental Deletion or Negligence
Human error is common—employees accidentally deleting files or misconfiguring systems. - Hardware or Software Failure
Data loss due to malfunctioning hard drives, server crashes, or software bugs. - Unauthorised Access and Hacking
Hackers accessing and modifying, deleting, or exfiltrating sensitive business information.
Exclusions in Data Restoration Coverage
While comprehensive, there are certain exclusions that businesses must be aware of. Insurers may deny claims under the following conditions:
- Pre-Existing Conditions
Losses arising from vulnerabilities or incidents that occurred before the policy’s inception. - Poor Backup Practices
If a business fails to maintain regular backups or does not follow reasonable data protection practices, the claim may be denied. - War, Terrorism, or Government Seizure
Incidents linked to cyber warfare or government intervention are typically excluded unless explicitly covered. - Physical Damage
Losses resulting from physical perils such as fire, flood, or theft of data storage hardware are generally not covered under Cyber Insurance and should be protected under property or electronic equipment insurance policies.
How Indian Insurers Offer Data Restoration Coverage
In India, several leading insurers provide Cyber Insurance policies tailored for both SMEs and large corporations. Here’s how data restoration and recovery is usually offered:
- Tata AIG
Offers Cyber Insurance policies with specific coverage for data loss due to malware, ransomware, and accidental deletion. Recovery and system reinstallation expenses are included. - ICICI Lombard
Provides restoration coverage under its “Cyber Safe” policy, primarily for individuals. For businesses, corporate policies offer broader data recovery protection. - HDFC ERGO
Cyber Insurance plans include restoration of damaged or lost electronic data due to cybercrime or malware attacks.
Please Note: Many insurers offer this as an optional add-on or within a bundled coverage package. Always read the policy wordings to understand sub-limits, waiting periods, and conditions.
Real-World Scenario: Ransomware Hits a Logistics Company in Mumbai
Case Study: In 2023, a Mumbai-based logistics firm was targeted by a ransomware gang. The attackers encrypted all their shipment tracking data and payroll systems. The ransom demand? ₹75 lakh in Bitcoin.
Instead of paying, the company initiated a claim under its Cyber Insurance Policy. With data restoration coverage, they hired a certified cyber forensics team to retrieve backup files, reinstall applications, and validate data integrity. Total remediation and recovery costs amounted to approximately ₹28 lakh, with a majority covered under the company’s Cyber Insurance Policy.
The company was back online within 72 hours—without giving in to ransom demands.
Best Practices for Indian Businesses to Ensure Restorability
Cyber Insurance is only as effective as your preparedness. Here are actionable steps to ensure your data restoration coverage actually works when needed:
- Maintain Regular Data Backups
Automate backups and store them in secure, off-site or cloud-based locations. - Implement Access Controls
Limit file access based on user roles to reduce accidental or malicious tampering. - Train Employees
Educate staff on phishing, secure file handling, and reporting suspicious activity. - Document IT Infrastructure
Keep updated inventories and architecture maps so systems can be quickly reinstalled. - Review Your Policy
Make sure your cyber policy includes restoration coverage with limits that match your business needs.
Final Thoughts:
In a hyper-digital world, data is currency—and data loss is chaos. No business in India, whether a tech startup or a traditional manufacturing firm, can afford the operational and reputational damage that comes with losing critical data.
Data restoration and recovery coverage under Cyber Insurance isn’t just a technical safeguard; it’s a strategic business decision. It offers peace of mind that no matter what cyber curveball comes your way, your business can recover quickly, confidently, and cost-effectively.
So, if you haven’t already, it’s time to evaluate your current Cyber Insurance Policy—or get one that’s tailored to your industry and risk profile. The future of your business may just depend on how well you can restore the past.
