Like it or not, smartphones are becoming increasingly important in buying things, banking online and interacting with the rest of the world.
So the prospect of your phone being stolen is frightening, as the customer not only loses a precious device, but also exposes himself to fraud.
Someone who steals a phone can gain access to banking information, credit and debit card information, and everything needed to steal an identity.
Despite this, the average customer cannot simply call an insurer and take out insurance against fraud resulting from theft of their phone.
But that will change this year with the launch of a new insurance product from insurer Wallife.
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This Biometrics ID deal is paid out if a customer’s smartphone is stolen and they suffer some financial loss as a result.
When the product launches later this year, it will also provide protection to prevent this type of fraud from happening in the first place.
But there are a few conditions attached and some of the protections offered by the deal are already provided by banks.
Here’s everything we know so far about how the new type of insurance contract will work.
What Does Biometrics ID Do?
The idea is that the policy protects an individual’s digital identity if a fraudster gets hold of their smartphone.
It does not pay out for any other type of fraud loss that does not involve a phone, such as someone being scammed on a computer.
An app associated with the Wallife policy can detect if a phone has been stolen using some form of digital fingerprint.
It does this by checking for major changes in how a phone is handled and used, for example a phone that is unlocked and operated in a different way than usual.
If suspected fraud is detected in this way, the policy will pay out any financial losses.
Customers also receive technical assistance to recover lost data, cyberbullying assistance, and legal assistance.
People on a Wallife deal also get compensation for legal fees for crimes committed by criminals who have stolen their identities.
The Wallife app also helps screen links, documents and codes for potential fraud, reducing the likelihood of a policyholder falling victim to fraud.
Bruno Ferreira, Chief Growth Officer of Wallife, said: “In Western Europe, around one in three people have experienced a digital identity attack in some way – whether that be their social media profiles or emails that are hacked, or their financial accounts have been attacked.
“But to date there have been no insurance products to protect affected consumers and help them get back on their feet.
“When you consider how much of our lives are now lived online, this is a huge gap in the market that is not served by existing insurance providers.”
The deal will not pay for the cost of your stolen phone.
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How much is it?
There are currently no Wallife policies for sale in the UK.
Wallife is an Italian insurer and is still setting up a UK branch.
However, Wallife’s Italian cybersecurity policies start at €54 (£46.08) when paid annually, rising to €84 and €120 depending on the level of cover the consumer wants.
A spokesman for Wallife said UK premiums are likely to be similar to those in Italy when the deal goes to market this year.
Will I not receive part of this coverage from my bank?
Yes. If your smartphone is stolen and a fraudster uses it to steal your money, your bank should pay you back.
Under the Payment Services Regulations, banks must pay victims of unauthorized fraud in full.
That means some of the protection Wallife offers is already available in the UK.
However, a Wallife spokesman defended the policy, saying: ‘It is true to say that consumers can recover lost money from their current bank, but there are increasing gray areas where banks are resisting liability for all cases.
“The combination of what Wallife offers – a technology solution that prevents many instances of fraudulent entry, risk education and insurance coverage – means consumers can have a lot more peace of mind that their digital identities are protected – not just their finances, but their social media profiles as well.” and their data.’
Wallife wouldn’t pay for fraud losses if a customer was scammed into transferring money to a criminal – but then half of all banks wouldn’t either.
This is known as “authorized push payment” or APP fraud. Because Wallife policies only pay out if a phone is stolen, APP claims do not count.
Even banks pay only half of APP fraud claims, with the exception of TSB, which has agreed to pay all such claims.
What are the alternatives to Wallife?
Currently there are no other insurers in the UK selling this type of insurance for individuals.
Cyber insurance for businesses has been around since 1997 but was slow to take off.
Some other insurers do offer cyber coverage as part of home insurance for high net worth homeowners, but there are no stand-alone insurance policies to cover hacking risks.
A spokesman for Wallife said: ‘We believe our offering is unique. Today’s insurance service providers have not kept up with online trends and threats, so there are currently no suitable products on the market to cover emerging threats posed by technology, even though one in three people have experienced a digital identity breach.”
In the UK there are other products that offer levels of protection against hacking, but these are not insurance deals.
For example, computer security company Norton has an ‘identity advisor plus’ package for £19.99 a year, which scours the internet for misuse of your data.
You will then be alerted to identity theft and directed to a team of experts who can assist you. However, it is not an insurance contract and so there is no cash payout.
Similarly, the Bitdefender company’s digital identity protection offers the same protection for £2.99 per month, or £35.88 for the first year.
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