1. Forms
2. HO
3. HO-06-48

Identity Fraud Expense Coverage - HO 06 48

What the form is: The HO 06 48, Identity Fraud Expense Coverage endorsement, is a modification to a standard Homeowners policy (like the HO 00 03) that provides reimbursement for specific expenses incurred by an insured as a direct result of identity fraud. It's crucial to understand that this endorsement typically covers the expenses associated with restoring one's identity, not the direct financial losses from the fraud itself (e.g., money stolen from a bank account). The fraud must be first discovered by the insured during the policy period for coverage to apply.

Classes of business it applies to: This endorsement is designed for personal lines Homeowners insurance. It applies to individuals and families who have a Homeowners policy and wish to add a layer of protection against the costs of dealing with identity theft. It is not intended for commercial businesses. Real-world examples of when this coverage would be beneficial include:

• An individual whose credit card information is stolen and used to open new fraudulent accounts, incurring costs for credit reports, notarizing fraud affidavits, and making long-distance phone calls to creditors.
• A homeowner whose social security number is used by someone else to file a fraudulent tax return, leading to expenses for legal consultation and certified mail to resolve the issue with tax authorities.
• Someone whose driver's license is duplicated and used by an imposter, resulting in lost wages for time taken off work to clear their name with the Department of Motor Vehicles and law enforcement.

Special considerations:

• Covered Expenses: It's important for both the insured and the agent to understand what specific expenses are covered. These typically include costs for notarizing documents, certified mail, loan re-application fees, long-distance phone calls, and sometimes lost wages or attorney fees up to a certain limit. Some policies may also offer access to identity restoration services.
• Coverage Limits: The endorsement will have a specific limit of liability, which is the maximum amount the insurer will pay for all covered expenses arising from any one identity fraud event. This limit is often a modest amount (e.g., $15,000 or $25,000) and may be subject to a deductible.
• Discovery Period: The fraud must be first discovered during the policy period. Fraud that occurred prior to the policy period, even if discovered during, may not be covered.
• Exclusions: Coverage typically does not apply to expenses incurred due to fraudulent acts committed by a family member or someone else living in the household. Business-related identity fraud is also generally excluded.
• Relationship to HO 00 03: The HO 06 48 modifies the base HO 00 03 policy by adding this specific coverage. It does not replace or alter other coverages within the HO 00 03 unless explicitly stated.
• State Variations: While the prompt indicates "All states," it's important to note that specific coverage details, limits, and the availability of the endorsement can sometimes vary by state or by insurer. Some states may have specific requirements or definitions related to identity fraud coverage. For example, some states might mandate that the definition of identity fraud includes misdemeanors in addition to felonies.

Key information for agents and underwriters:

• Pricing: This coverage is typically offered for a relatively low additional premium.
• Risk Assessment: Underwriting for this endorsement is generally not intensive. The risk is more about the potential frequency and administrative cost of small claims rather than large, catastrophic losses. However, an insured's overall risk profile might be considered.
• Coverage Gaps: Agents should clearly explain that this endorsement covers expenses and not direct financial losses from theft. Insureds should be advised to monitor their accounts, use strong passwords, and take other preventative measures. This endorsement is a reactive coverage for expenses after fraud occurs.
• Underwriting Guidelines: Insurers may have guidelines regarding eligibility, such as the primary policy (HO 00 03) being in force and the insured meeting general underwriting criteria. While not a significant driver of loss, repeated claims under this endorsement by a single insured might trigger an underwriting review of the entire account.
• Documentation for Claims: Insureds will typically need to provide documentation of the identity fraud (e.g., police reports, affidavits of fraud) and receipts for the expenses they are claiming.
• Marketing Opportunity: With the increasing prevalence of identity theft, this endorsement can be a valuable and relatively inexpensive coverage enhancement to offer clients, demonstrating an agent's proactive approach to addressing modern risks.