As consumers become more concerned about identity theft, the credit bureau Equifax Inc. has teamed up with the insurer American International Group to offer specialized insurance for identity risk.
Atlanta-based Equifax said Tuesday that AIG Personal Internet Identity Coverage is now included as part of Equifax’s Credit Watch product, which helps people monitor their credit. Equifax markets Credit Watch on its Web site, through links from financial Web sites, and through arrangements with credit card issuers, including one announced last month with Capital One Financial Corp.
The AIG insurance policy will reimburse people for certain expenses related to identity theft, such as those associated with refiling for loans, grants, or other credit; legal defense costs for civil suits; and payment of lost wages as a result of time taken from work to replace identity-related items.
Virgil Gardaya, the general manager of consumer services at Equifax, said this is the first time insurance has been included in its Credit Watch product. Thousands of identity thefts occur annually, according to Equifax, with thieves stealing a person’s financial information and using it fraudulently to establish credit. Mr. Gardaya — who was a victim himself a few years ago, when several credit card accounts were opened in his name — said cleaning up the mess can cost hundreds, or even thousands, of dollars.
Though most banks will not force a consumer to pay fraudulent charges, he said, costs can arise for long-distance phone calls, certified letters, attorney fees, and lost wages.
Jean McDermott-Lucy, a vice president of AIG eBusiness Risk Solutions, the AIG unit providing the insurance, said resolving an identity theft can take 175 hours of work and often people are bewildered by the many companies they must deal with. Personal Internet Identity Coverage is “really a peace of mind cover as well financial,” she said.
Equifax’s Credit Watch is a service that lets people monitor their credit for a fee of $69.95 per year.
Users of the service get alerts when there are key changes in their credit file, as well as access to their own credit report and FICO credit score. There is also a phone center for questions about credit, identity theft, and other issues. Mr. Gardaya said the service also gives customers information about what steps to take if they suspect identity theft, including going to the police, contacting card insurers, and other actions.
The AIG insurance will be included immediately in the product for all new and existing customers, at no extra cost. Equifax said 170,000 of its 3.5 million customers use Credit Watch.
Mr. Gardaya had no data on how many Credit Watch customers have had their identities stolen or what their incidental costs were for correcting the problem, but he said he had spoken to people who spent more than $1,000.
AIG eBusiness Risk Solutions was formed by AIG to offer insurance products and risk management services to address problems arising in connection with network security, trade credits, identify fraud, and credit card fraud.
Travelers, Farmers Insurance, and other companies also offer identity-risk coverage. Mrs. McDermott-Lucy noted, however, that most other firms offer it as an endorsement to a homeowners policy. AIG is not doing that, she said, but in addition to the deal with Equifax, is marketing the product as an employee benefit.
