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Identity theft can lead to severe consequences, like serious damage to your credit, unauthorized transactions on your credit card and criminals opening credit accounts in your name. Plus, you may have to pay several fees out of pocket to restore your identity. Fortunately, identity theft insurance can help reimburse you for some of those fees and help restore your credit. The average cost of identity theft insurance ranges from $25 to $50 for $15,000 to $25,000 of coverage, according to the Insurance Information Institute (Triple-I). You can purchase this coverage by adding a rider to your current home insurance policy or purchasing a separate policy. Bankrate’s insurance editorial team explains what you need to know about identity theft insurance.
What is identity theft insurance and what does it cover?
The personal property coverage of a homeowners insurance policy offers little protection against most identity theft. Typically, home insurance policies cover the theft of belongings such as clothing and furniture. Most homeowners policies also cover the theft of a limited amount of cash. If a burglar steals your wallet, for example, your home insurance might reimburse you for the money it held, typically limited to a few hundred dollars. But if the thief uses the personal information obtained within the wallet to get a car loan, your homeowners policy will likely not come to the rescue.
Identity theft often goes far beyond the initial monetary losses. When a fraudster uses your credit card to buy an airline ticket, you can cancel the card and request a new one. Oftentimes, the credit card company will reimburse you for any monetary losses, following a short investigation. But other types of identity theft can cause serious (sometimes lasting) damage to your finances and credit rating. You may have to hire an attorney to help restore your credit standing or to fight civil judgments that could result from fraudulent accounts opened in your name.
Most major property insurance providers offer identity theft coverage as a rider or endorsement to a homeowners policy and a few include it in standard home policies. Identity theft coverage varies widely, from reimbursement of stolen funds to a host of services to help repair the financial damage.
Identity theft policies may include:
- Assistance of a fraud specialist
- Credit monitoring services
- Reimbursement of lost wages caused by taking time off from work to restore your credit or reclaim your identity
- Aiding with civil judgments, criminal charges, audits or hearings related to fraud perpetrated by the “imposter”
- Professional assistance in reclaiming your identity and restoring your credit
- Reimbursement of costs involved in replacing identification documents, such as a driver’s license, passport or Social Security card
- Reimbursement of audit and account application fees
- Reimbursement of attorney’s and court fees associated with civil judgments
Which insurance companies offer identity theft protection?
Most major home insurance companies offer optional identity theft coverage. You may even be able to add identity theft insurance when submitting information for an online quote. According to the Triple-I, adding this coverage to your existing homeowners policy typically costs less than $50 per year. The best types of identity theft insurance include reimbursement for fraudulent charges or stolen funds, plus credit monitoring.
When you purchase an Allstate home insurance policy, you can add its optional identity theft protection, which offers a comprehensive collection of benefits. Allstate’s Digital Footprint service collects data from all your accounts and alerts you if someone opens a new account in your name or when your data is breached. Allstate also monitors your credit, financial and social media accounts and alerts you if your information appears on the dark web, where criminals buy and sell stolen data. If a fraudster targets you, Allstate will cover up to $1 million in reimbursements for money stolen from your bank account, depending on which identity theft plan you choose.
Learn more: Allstate insurance review
Amica’s identity fraud coverage pays up to $15,000 in expenses you incur resolving identity theft issues, including legal fees, lost wages and notary fees. Amica also provides policyholders professional identity theft assistance, along with credit monitoring.
Learn more: Amica Mutual insurance review
State Farm’s Identity Restoration Insurance reimburses up to $50,000 in necessary expenses related to identity theft restoration, including application fees, attorney’s fees, auditing costs, civil judgments, court costs and credit report fees. You can also add cyber attack and cyber extortion coverage, which pays up to $15,000 in expenses incurred to retrieve your data if a ransomware program hijacks your computer.
Learn more: State Farm insurance review
The Hartford’s optional Identity Fraud Expense Coverage reimburses you for up to $25,000 worth of expenses related to fraud and identity theft. You can beef up your protection by adding The Hartford’s Identity Restoration Services and ID Hotline coverages, which include the services of fraud specialists.
Learn more: The Hartford insurance review
Is identity theft insurance worth it?
The threats of today’s online world demand all types of protection. Because of the sensitivity of people’s private information, such as Social Security numbers, bank accounts and passwords, there are services available to protect you from identity theft in case leaks happen. Identity theft insurance is generally very affordable, especially when you add it as a rider or endorsement to your homeowners coverage.
Identity theft insurance may not be for everyone. There are steps you may take on your own to protect your identity, such as setting up randomized passwords and regularly checking your credit report. Additionally, because reimbursement for stolen money and other assets is generally not included in the insurance, if a thief steals your identity, you may end up spending thousands of dollars reclaiming your identity and restoring your credit. But for a nominal additional cost per month (with many companies), you could feel more at ease knowing your sensitive information is being monitored and help is available in case something goes awry.
Alternatives to identity theft insurance
Although identity theft insurance may prove beneficial, it is not the only option you have to protect yourself and your information. Identity theft insurance can help cover the cost of reclaiming your identity and restoring your credit following a fraud incident, but you can also take steps to prevent becoming a victim.
Spot identity fraud yourself
By following a few simple steps, you may be able to prevent and identify digital fraud without external assistance. These steps include regularly checking your financial statements for unauthorized transactions, enabling two-factor authentication for online accounts, and avoiding sharing of personal information with suspicious parties like scam emails and telephone calls.
Use free resources
To prevent identity fraud, there are a few resources that all consumers can access free of charge. Setting up fraud alerts through any one of the three national credit bureaus (Equifax, Experian and TransUnion), requesting identity protection PIN from the IRS when filing tax returns and implementing a credit freeze with the major credit bureaus in case of suspected identity theft are some of the ways to prevent and spot suspicious activities associated with online accounts.
Get an identity theft protection service
When you have multiple online accounts, keeping an eye on all of them can be extremely challenging and time-consuming. In such cases, purchasing a cyber identity theft protection service can be very beneficial. These services monitor your online activities and alert you of suspicious activity associated with your personal information. The most popular cyber protection services include:
- Norton LifeLock: This combines antivirus protection along with identity monitoring service. LifeLock alerts you when it detects suspicious activity that may threaten your personal data and reimburses you for up to at least $25,000 in stolen funds, depending on the plan you choose. LifeLock’s service includes Norton antivirus protection along with identity monitoring service.
- Identity Guard: An identity theft protection service brought to you by IBM, Identity Guard scans the web for your personal information, gives you tools for safe browsing, and includes an anti-phishing mobile app to protect your phone as well. You can also monitor your credit activity through all three credit bureaus. Cyber protection services can monitor your online activity and alert you of suspicious activity associated with your personal information.
- TransUnion TrueIdentity: Part of the TransUnion’s credit bureau, this service offers protection for identity theft up to $25,000 free of charge. Users can also receive alerts for significant credit information changes reported to TransUnion, as well as unlimited access to updated TransUnion credit reports. Although the service is free, users who want more protection and information have to pay for the upgraded product, including monitoring your identity on the dark web, among other things.
- IdentityForce: A top-rated cyber protection service, IdentityForce includes medical identity fraud protection, cyber fraud, junk mail opt-out, and social media identity protection.
Frequently asked questions
The price of identity theft insurance varies by insurer. That said, when you purchase homeowners insurance, many providers offer optional identity theft coverage for $10 per month or less as an add-on to your existing home policy. For instance, GEICO’s identity theft protection plan starts out as low as $7.99 per month, according to the carrier’s website. You can also purchase a separate identity theft protection policy from a different insurance provider.
If you become a victim of identity theft, contact your insurance provider immediately to determine the next steps. Depending on your coverage, your insurance company may reimburse you for out-of-pocket costs like attorney fees or credit restoration. In addition, it’s a good idea to contact the police to file and report before filing one with the FTC.
Yes, some insurance companies offer couple and family plans. For example, GEICO offers couple plans for $8.99 per month and family plans for $9.99 per month.