If you were one of the 12.6 million people who fell victim to identity theft last year, hopefully you were able to recover your identity and lost assets. It's common, however, to lose days of work and thousands of dollars in the struggle to regain control of your finances. A new product called identity theft insurance might have come in handy.
Lynne McChristian, Insurance Information Institute, Florida representative:
"It covers the expenses that you would use to restore your credit. For example, it may take hours. It's a process. It's not simple, unfortunately. It's simple for the criminals to take the money from you; it's not so simple to get back your good credit rating. So what it does, it'll cover the cost of phone bills. It'll cover the cost of a notary if you need that. It may also cover lost wages. And another thing it will do is some of the policies cover attorney's fees that are associated with reclaiming your good credit."
While ID theft insurance will cover the expenses associated with recovering your identity, it will not replace stolen funds or pay down fraudulent charges you may have been stuck with. Policies differ by company, so it's important to shop around and know what the insurance covers and the limitations.
"If the policy covers attorney's fees, what's the limit of that? How does that process work? Do I have to get approval before I contact an attorney? So you want to make sure you understand that and then also if it covers lost wages. Because you're going to spend some time trying to recover your identity, and so if it covers lost wages, what's the limit on that because it could take a lot of time for you to do this. So you want to understand what are the particulars in that policy, and then decide if it's worth it."
As you research identity theft insurance, it's worthwhile to find out what coverage you already have. Many homeowners policies offer a modicum of identity theft protection already. And sometimes the more conventional means of protecting and monitoring your credit such as checking your credit report regularly and monitoring your bank accounts will be enough to keep you safe. If not, upping your identity theft coverage runs as little as $25 a year. For more on this and other personal finance topics, visit Bankrate.com. I'm Lucas Wysocki.