Sample Data Breach Expense And Liability Coverage Endorsement Available

Friday, January 04, 2013

AAIS is introducing an optional endorsement that addresses both first- and third‐party exposures arising out of data breach events. The endorsement is provided on a sample basis, suitable for use with the 06 12 edition Businessowners forms. Sample endorsement BP 4906 11 12 was developed in conjunction with IDT911, which is available as a provider of the data breach services that are the subject of the first‐party coverage provided under this endorsement.

AAIS does not file sample endorsements. More information regarding the company action required to adopt endorsement BP 4906 11 12 is provided in this release.


Previous information about the introduction of a 'sample' endorsement, BP 4905 11 12, that provides the first‐party expense coverage in the event of a covered data breach is provided here. That endorsement, developed in conjunction with IDT911, covers expenses incurred for services provided to the data breach victims, including pre‐notification consulting, notification to data breach subjects, and credit and fraud monitoring for identity theft victims, as well as expenses incurred to conduct forensic investigation and legal and regulatory research. Endorsement BP 4905 was developed to specifically facilitate the use of IDT911 as a data breach service provider.

The previous announcement advised companies to file endorsement BP 4905 11 12 and any supporting rules and rating information they may develop with the applicable state insurance departments prior to using these materials.

As a continuation of this joint effort between AAIS and IDT911, a second endorsement has been developed and is now available to AAIS affiliates that may wish to offer both first‐ and third‐party data breach coverages to their insureds. More information about IDT911 and the new endorsement is provided in the sections that follow.

For more information about IDT911 and the Data Breach Expense And Liability Coverage endorsement, contact Samuel Broomer, Vice President, at 1‐480‐745‐5239, or email at


The Data Breach Expense And Liability Coverage endorsement provides first‐party expense coverage as well as coverage for third‐party liability, defense, and regulatory fines and penalties.The first‐party coverage provided under endorsement BP 4906 11 12 is identical to the coverage provided under endorsement BP 4905 11 12, as subsequently amended.

U nder BP 4906, coverage is expanded to also pay for third‐party legal claims and related defense costs, as well as fines and penalties that result from regulatory proceedings, arising out of a data breach event. Coverage D ‐ Data Breach Liability, Defense, And Regulatory Expense encompasses these coverages. Coverage D is triggered by a data breach event that gives rise to the legal claims and/or regulatory proceedings and that occurs within the policy period. The insured must report the event to the insurer as soon as practicably possible and the insured must have provided the notification recipient services, a subject under the first‐party coverage of the endorsement, through IDT911 or an approved service provider.

Coverage D is subject to the following provisions. The various limits and deductible can be shown by entry on the endorsement schedule. (The schedule of BP 4906 accommodates two sets of limits and deductible: one set applies to the first‐party coverage and another set applies to the third‐party coverage.)
• a combined Coverage D annual aggregate limit;
• a liability annual aggregate limit;
• a defense costs annual aggregate limit; and
• a Coverage D deductible that applies on either an each legal claim basis or an each regulatory proceeding basis.

The endorsement is being provided on a sample basis, meaning that AAIS is not filing the endorsement with regulators on behalf of its affiliates. Furthermore, AAIS will not be developing rules or rating information in support of endorsement BP 4906.

Companies that intend to use this endorsement are required to finalize it by removing the explanatory notes in the heading and assigning a company‐specific form number, develop supporting rules and rating information, and take appropriate filing action in all jurisdictions in which the endorsement will be used.


The endorsement is being provided on a sample basis, meaning that AAIS has and will not file it with any of the state insurance departments on behalf of its affiliates.

Companies that intend to use this endorsement and any supporting rules and rating information must take the appropriate filing action. Refer to the Compliance Guide for the applicable filing guidelines.

When companies that have granted AAIS filing authority for Businessowners forms and adopted endorsement BP 0370 07 12, Data Compromise Expense Coverage, file endorsement BP 4906 11 12, they should indicate in their filing that BP 0370 07 12 is being replaced by BP 4906 11 12. Companies may choose to adopt either or both of endorsement BP 4905 11 12, as described in the preceding section, and endorsement BP 4906 11 12 as options to offer first‐party only and/or first‐ and third‐party coverages to their policyholders. In either case (whether a company adopts one or both endorsements), they must 'cease' the use of endorsement BP 0370 07 12.

About IDT911®
Founded in 2003, IDT911 is the nation’s premier consultative provider of identity and data risk management, resolution and education services. The company serves 17.5 million households across the country and provides fraud solutions for a range of organizations, including Fortune 500 companies, the country’s largest insurance companies, corporate benefit providers, banks and credit unions and membership organizations. Since 2005, the company has helped more than 600,000 businesses manage data breaches. IDT911 is the proud recipient of several awards, including the Stevie Award for Sales and Customer Service and the Parent Tested, Parent Approved award for social networking monitoring tool SocialScout. For more information, please visit, and

About AAIS
AAIS is a national insurance advisory and statistical organization that develops standardized policy forms and rating information for over 25 programs of personal, commercial, farm, and inland marine insurance. Along with product innovation, AAIS is known for the expertise and accessibility of its staff, seasoned professionals who devote their time and attention to helping insurers adopt and maintain programs as easily as possible. More than 700 property/casualty insurers of all sizes use one or more programs from AAIS.

For more information, please contact IDT911 PR Manager Kelly Santos at

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