insurance
Do you need insurance for identity theft?
Some important considerations include the following.
- Are any other services included? Even if an identity theft insurance policy will reimburse or offset the costs involved in resolving the incident, it won't reduce the time and hassle required to rectify the situation, Barnett says. Ask if the insurer will provide help with any of the recovery work.
- Is there a deductible? A significant deductible, such as $500 or more, is not unusual for identity theft insurance, Barnett says. If the costs to repair the damage to your identity are less than the deductible, you still may be responsible for paying for all the damages. On average, victims of identity fraud pay an out-of-pocket cost of $631 per incident, according to 2010 data from Javelin Strategy & Research.
- Does the policy cover legal expenses or lost wages? Legal expenses and lost time from work are sometimes not covered under identity theft policies, and if they are, there may be a limit as to how much is paid and preapproval may be required, Barnett says. Because these can be costly results of identity theft, a policy that specifically provides for reimbursement of lost wages or legal fees may be worth the premium, he says.
Other options for ID theft protection
Aside from identity theft insurance policies, consumers have other options for protecting themselves against ID fraud, such as credit monitoring services. However, these services can cost between $8 and $30 per person per month, and only detect certain forms of ID theft, according to Barnett. "Identity thieves can easily misuse your information in many ways that may never appear on your credit report, and the potential damage of an identity theft incident is not limited to what may get reported to a credit bureau."
Most credit monitoring services will not alert you to several types of activity that could be related to identity theft, such as someone obtaining a driver's license, birth certificate, Social Security card, or other such documents or identification in your name, Barnett says.
Another way to protect yourself from identity theft is to obtain and review your annual credit reports on your own, at no charge. The federal Fair and Accurate Credit Transactions Act allows you to receive a copy of your credit report from each of the national credit reporting agencies for free, once per year. You may also want to consider a credit freeze if you are not actively applying for credit yourself -- it prevents new creditors and businesses from pulling your credit file.
"Consumers have many risk-management resources available to them, both free and fee-based," Barnett says. "Many consumers fall victim to identity crimes through absolutely no fault of their own, but it is critical that you remain vigilant and take care to safeguard your personal information at all times."