Identity theft strikes when you least expect it, and oftentimes you can’t trace how a thief obtained your personal information. With just a little bit of your information, thieves can make fraudulent charges on your debit card, steal money from your bank account, obtain a credit card or take out a loan.
According to Javelin Strategy and Research, a firm focused on the digital challenges of the financial world, certain types of cybercrimes are actually declining. In 2018, 14.4 million people fell victim to various types of fraud, a 15% decrease from the previous year. However, new account fraud, through which thieves use stolen information to apply for car loans, credit cards, mortgages and student loans, is on the rise, resulting in $3.4 billion in losses in 2018.
Unfortunately, more than 20% of fraud victims end up paying for losses out of their own pocket. But if you make a small investment in identity theft insurance, you can avoid losses and get the help you need when a fraudster strikes. Obtaining the protection you need is easier than you might expect. Oftentimes, it’s as easy as adding a rider to your homeowners insurance policy.
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 belongings such as clothing and furniture. Most homeowners policies 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 won’t 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 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 or to fight civil judgements that could result from fraudulent accounts opened in your name.
Most major property insurance providers offer identity theft coverage as a rider to your 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 damage. Some identity theft policies 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
- Professional assistance in reclaiming your identity and restoring your credit
- Reimbursement of costs involved in replacing identification documents, such as a driver’s license or Social Security card
- Reimbursement of audit and account application fees
- Reimbursement of attorney’s and court fees associated with civil judgements
Which insurance companies offer identity theft protection?
Most major home insurance companies offer optional identity theft coverage. Oftentimes, you can even add identity theft insurance when submitting information for an online quote. The best types of identity theft insurance include reimbursement for fraudulent charges or stolen funds, plus credit monitoring.
Allstate: 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. If a fraudster targets you, Allstate will cover up to $500,000 in identity theft restoration expenses and provide in-house fraud restoration service to guide you through the process.
Amica Mutual: 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.
State Farm: State Farm’s Identity Restoration Insurance reimburses up to $25,000 in expenses related to identity theft restoration, including application fees, attorney’s fees, auditing costs, civil judgements, 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.
The Hartford: 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.
USAA: USAA includes a limited amount of identity theft coverage in all its standard homeowners policies. The coverage only pays up to $5,000 in identity restoration expenses, but you can purchase additional protection. USAA identity theft protection isn’t available in all states and the provider only offers insurance products to military members and their families.
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. Cyber protection services can monitor your online activity and alert you of suspicious activity associated with your personal information. For example, the LifeLock service includes Norton 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 $25,000 in stolen funds.
Is identity theft insurance worth it?
The threats of today’s online world demand all types of protection. Identity theft insurance is very affordable, especially when you add it as a rider to your homeowners coverage. For example, State Farm’s Identity Guard coverage costs just $25 per year. Geico identity protection starts at around $8 per month and LifeLock starts at $10 per month.
If a thief steals your identity, you may end up spending thousands of dollars reclaiming your identity and restoring your credit. But for less than $10 per month, you can rest at ease knowing you’re protected. That’s a deal you can’t afford to dismiss.
Frequently asked questions
How much is identity theft insurance a month?
When you purchase homeowners insurance, some providers offer optional identity theft coverage for $10 per month or less.
Does my homeowners policy cover identity theft?
Most standard homeowners policies include little or no identity theft coverage. If someone steals your wallet, your homeowners policy may reimburse you for a limited amount of cash, but that’s about all. Most major home insurance companies offer identity theft insurance as a rider to your homeowners policy.
Will identity theft insurance reimburse me if someone fraudulently uses my credit card?
It depends. Many identity theft policies reimburse you for stolen funds, but some only help pay costs related to restoring your credit and reclaiming your identity.
Do identity theft policies include credit monitoring?
Some do and some don’t. The most comprehensive identity theft insurance covers expenses you may incur reclaiming your identity and restoring your credit, along with account and credit monitoring to help prevent identity theft from occurring.