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A Thing

Insurance policy covers ID theft liabilities

Product: AIG corporate identity protection insurance
Company: C.L. Frates and Co.

Managing risk can be a payment company's biggest responsibility. Reading the weekly reports of corporate and government data breaches, execs sometimes think, What if it happened here?

Boardrooms and stakeholders have taken notice and privately begun estimating the potential losses if it does happen there. Now an insurance product puts a price tag on an otherwise bottomless pit of liability.

C.L. Frates and Co., a licensed agent contracted by underwriter AIG Insurance Co., offers AIG corporate identity protection insurance. The policy is designed to shield businesses from liability exposure and subsequent expenses stemming from a loss of personal information.

It is intended for businesses with sales of up to $100 million and fewer than 1 million customers that hold sensitive personal identity information about employees, clients and other parties.

In some of the high-profile instances of data loss, class action lawsuits have been filed. Many of these businesses have spent time and money responding to government inquiries related to the release of personal information.

In many cases, they also foot the bill for ongoing credit monitoring of the affected individuals, who sometimes number into the tens of thousands.

AIG corporate identity protection provides coverage for personal identity liability and defense; administrative action; and identity event activities such as notification, crisis management and post-event services.

The policy covers an event that has or could result in the fraudulent use of individuals' personal identifiers, Social Security numbers or other information that was in the control of the insured party.

Coverage does not depend on a wrongful or negligent act on the part of the policyholder. The policy covers the insured if information is lost digitally or physically, according to C.L. Frates and Co.'s Vice President Tom Mulligan.

For example, if an employee list being delivered physically to an outsourced human relations firm were stolen en route, expenses due to the loss would be covered.

The proposed minimum premium is approximately $1,300 for an aggregate payout limit of $100,000. The maximum aggregate payout limit is $5 million, with a minimum premium of $11,500.

Actual premiums may be considerably more based on the insured's actual exposure. For example, a $5 million limit for a business with $90 million in sales may cost around $30,000, according to the company.

For larger businesses or those desiring limits greater than $5 million, the company sells the broader AIG Security and Privacy policy.

C.L. Frates and Co.

Article published in issue number 060901

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