OGC Opinion No. 08-03-14

The Office of General Counsel issued the following opinion on March 19, 2008, representing the position of the New York State Insurance Department.

RE: Identity Theft Insurance

Question:

Do the New York Insurance Law and the regulations promulgated thereunder authorize identity theft insurance, through a “stand alone” policy, which includes a component that covers costs incurred while the victim restores his or her identity?

Conclusion:

Neither the Insurance Law nor the regulations promulgated thereunder authorize identity theft insurance that covers costs incurred while the victim restores his or her identity per se, although the Insurance Department has approved policies that include such coverage as a component of other coverage (like homeowners). The Department has proposed legislation to authorize “stand alone” identity theft coverage.

Facts:

The question is of a general nature, without reference to particular facts.

Analysis:

Identity theft coverage typically does not provide for loss to property, but only for incidental and remedial expenses incurred in connection with identity theft.

N.Y. Ins. Law § 1113 (McKinney 2006) sets forth the kinds of insurance that are authorized in New York. Burglary and theft insurance is authorized pursuant to Insurance Law § 1113(a)(7), and covers actual loss to property (e.g; stolen money) However, coverage providing solely for incidental and remedial expenses resulting from

identity theft is not a kind of insurance authorized pursuant to Insurance Law § 1113. Therefore, it generally may not be offered in New York as “stand alone” insurance.¹

Moreover, while many identity theft programs are provided on a group basis, such group coverage is not authorized under New York law.

In the past, the Insurance Department has worked with the insurance industry on legislative language that would amend Insurance Law § 1101 to authorize the sale of “stand alone” identity theft insurance. This year, the Department introduced its own bill to authorize such coverage and to recognize certain permissible groups.

For further information you may contact Associate Counsel Alexander Tisch at the New York City Office.

¹ The Insurance Department has authorized identity theft coverage as endorsements to homeowners and motor vehicle insurance policies.