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Kimball City Attorney and Marion County Attorney Billy Gouger

KIMBALL, Tenn. - The Kimball Board of Mayor and Aldermen has opted to purchase $1 million in information, security and privacy insurance to protect the town from issues that could stem from events like computer hacking.

Other events that trigger a need for this type of insurance are lost or stolen computers, backup drives or employee misuse, officials said.

Mayor Rex Pesnell said the Tennessee Municipal League recently offered the city an option to apply for the extra coverage, but the $14,604 annual premium was far more than city officials anticipated.

Pesnell decided to contact First Volunteer Insurance in Jasper, Tenn., to "see if we could get a better rate on that."

City Attorney Billy Gouger said that company sent two proposals to the town. One provided $500,000 in coverage for $3,500 per year, while the other charged Kimball a $5,800 annual premium for $1 million in coverage.

At its December meeting, the board voted unanimously to add the $1 million policy with First Volunteer.

The town may never need the coverage, Gouger said, but if it does, it's better to have "more than you need than less than you need."

He said the reason the TML's proposed premium is so high is that Kimball does not have its errors and omissions liability coverage, commonly known as E&O insurance, through that organization.

The city "doesn't have a lot of information that's at risk," Pesnell said, because employee medical records and most other private information are kept "in house."

Gouger said the city's potential threats include drivers' license information that is transmitted with court records and payroll records for employees that are kept electronically.

"I think that's the biggest risk," he said. "Basically, any type of breach of the town's online services is covered by this type of [policy]."

The biggest benefit to getting the policy is that it provides a legal defense and attorney representation as part of the coverage, Gouger said.

That would be critical in a claim of this type due to its highly technical and specialized nature. Gouger said Kimball would have to have attorneys that concentrate in that type of defense to get "effective representation."

"From what I see nationwide, it's just a matter of time before these hackers from foreign countries and even in the United States start trickling down to smaller cities and towns," Alderman John Matthews said.

Ryan Lewis is based in Marion County. Contact him at