Free insurance coverage for identity theft and computer damage is among the premium security offerings AOL is making available to its dwindling base of paying subscribers.

The move follows last month's decision to give away AOL.com e-mail accounts, software and other features once reserved for paying subscribers and remove key reasons for millions of customers to keep paid accounts.

The insurance, offered through American International Group Inc., pledges up to $10,000 (euro7,866) to help restore users' identity and credit regardless of how their Social Security number, bank account or other personal information got compromised.

The policy covers costs for refiling rejected loan applications, legal fees, credit reports and up to $2,000 (euro1,573) in lost wages. It does not cover any money lost in scams, although financial institutions sometimes absorb those losses.

A separate AIG policy covers up to $1,000 (euro787) to repair or replace computers that suffer physical damage.

But don't spill coffee quite yet: The replacement cost is limited to the computer's current value, not its purchase price. And yesterday's models are always worth less today.

The insurance is limited to subscribers under the $26-a-month (euro20) unlimited access and $10-a-month (euro7.8) broadband plans. It does not apply to the $10 (euro7.8)monthly plan with unlimited access but fewer features than the full plan. And New York state residents are ineligible because of state laws, AOL spokesman Andrew Weinstein said.

The policies require no deductible, but are secondary to other coverage, meaning a user's homeowner's or renter's insurance pays first. To activate the insurance, users must first use the firewall and computer checkup tools that AOL is introducing at no extra charge to paying subscribers Tuesday.

Over the past two years, AOL has been giving away more and more of its services to boost traffic to its ad-supported Web sites and prevent defection to comparable, no-cost offerings from rivals.

At the same time, the Dulles, Va.-based online unit of Time Warner Inc. has faced competition from low-cost service providers like United Online Inc. for the services for which AOL can keep charging — dial-up access.

The premium security offerings are an attempt to provide more value for the full-price plans.

"It could be very powerful,'' said Rob Enderle, an analyst with the Enderle Group. "You can get so much for free now. They are trying to differentiate the fee service.''

He notes that the identity theft insurance comes at a time people are increasingly worried about fraud online.

Some homeowners' policies already cover costs related to identity theft. When purchased separately, insurers generally charge $25 (euro19.7) to $50 (euro39.3) for $15,000 (euro11,799) to $25,000 (euro19,665) worth of coverage, according to the Insurance Information Institute, a trade group.

Besides insurance, subscribers of eligible plans get software for optimizing computers and for monitoring attempts by programs to send out credit card, bank account and Social Security numbers. Also included is a tool for wiping a storage disk clean so that deleted files can't be recovered should a user donate or resell a computer.

Subscribers of the $26 (euro20.45) plan also get 50 gigabytes of free online storage, 10 times the amount AOL gives away free to others.

AOL will also sell separately a Total Care product that includes automated backup services beyond what's offered with the free online storage. The product is still undergoing a "beta'' test, and prices have not been announced.

Total Care is comparable to the Windows Live OneCare service that Microsoft Corp. began offering in May for $50 a year to cover up to three computers. Both offer security software, backup services and computer utilities.

AOL, meanwhile, began giving away parental-control services on Monday, in line with its pledge last month when the company announced its strategy to make even more services free in light of continued declines in subscriptions _ to 17.7 million in the United States as of June 30, a 34 percent drop from its peak in September 2002.

The services block access to Web sites AOL or parents deem inappropriate for minors, limit when and how long kids stay online through a software timer and produce reports detailing their children's Internet activities.

Microsoft, which offers parental controls to paying customers of MSN, also is testing a free tool, Windows Live OneCare Family Safety.

Both AOL and Microsoft already make other security programs such as personal firewalls available free.

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