What is Identity Theft Insurance?
Identity theft insurance provides protection and assistance if your personal information is stolen and fraudulently used. It covers a range of expenses you may incur while restoring your identity and repairing damage done by thieves.
Identity theft insurance works similarly to other insurance policies. You pay a monthly or annual premium to the insurance company. If you experience identity theft, the insurer reimburses you for covered losses and provides services to help restore your identity. Policies differ, but common coverages include:
– Lost wages – Reimbursement for time taken off work to resolve identity theft issues.
– Legal fees – Payment for lawyers and legal advice if needed during the identity recovery process.
– Miscellaneous expenses – Coverage for costs like postage, notary services, and phone calls while disputing fraudulent accounts.
– Credit monitoring – Ongoing tracking of your credit reports and alerts of suspicious activity.
– Identity restoration – Assistance from fraud resolution experts in dealing with credit bureaus, government agencies, and merchants.
Identity theft insurance aims to save victims time and money in the often complex process of restoring good credit and securing accounts after identity theft occurs. It provides access to professional fraud specialists and coverage for out-of-pocket costs that can accumulate. Policies help limit the financial damage and give peace of mind.
Why Get Identity Theft Insurance?
Identity theft insurance provides important benefits that make it worth considering for many consumers. The main advantage is the peace of mind it brings in knowing you have protection if you do become an identity theft victim.
With identity theft insurance, the burden of resolving the identity theft largely shifts from you to professionals who specialize in identity restoration. The insurance provides services to help restore your identity and repair damage to your credit and finances. This can save you significant time and frustration in rectifying the problems caused by identity theft on your own.
Filing claims is designed to be straightforward with identity theft insurance. You simply contact the insurer if you become an ID theft victim, and they appoint a dedicated case manager to handle the restoration process. The case manager does the legwork of contacting credit bureaus, government agencies, banks and other relevant institutions to clear up fraudulent accounts and charges. This makes dealing with identity theft much easier compared to tackling all the remediation steps alone.
Identity theft insurance also covers related costs like legal fees, lost wages, miscellaneous expenses, and more depending on your specific policy. With the proper coverage, you don’t have to worry about draining your savings or going into debt to resolve identity theft issues and get your identity and credit back on track.
For many people, the benefits of protection and peace of mind are enough reason to consider identity theft insurance. Knowing your finances and identity are insured against theft provides confidence and security in an age of rising cybercrime and data breaches. The right policy takes the burden off your shoulders if identity theft does occur.
Coverage Options
Identity theft insurance plans typically offer different tiers or levels of coverage. Here are some of the most common coverage options:
Basic Coverage:
This covers the costs of resolving identity theft issues, including hiring lawyers, making calls, writing letters, and filling out paperwork. It reimburses documented lost wages and expenses incurred while restoring your identity. Basic plans usually have limits of $25,000-$100,000.
Comprehensive Coverage:
In addition to what basic plans offer, comprehensive plans provide coverage for fraudulent charges on your accounts and any funds stolen as a result of the identity theft. Some policies reimburse up to $1 million for these types of financial losses.
Full-Service Restoration:
The highest tier of coverage provides access to dedicated fraud resolution specialists who do the work of restoring your identity for you. This reduces the time and stress spent dealing with the aftermath. Restoration services are typically unlimited as long as you remain enrolled in the plan.
Additional Services:
Many providers offer add-on services like credit monitoring, identity monitoring, or identity theft assistance hotlines for extra fees. This provides proactive alerts if your identity is being misused.
When choosing a plan, review the coverage tiers and limits to determine what is right for your needs and budget. Comprehensive plans with higher limits provide more complete protection but cost more. Evaluate the likelihood of different identity theft scenarios to decide if you need maximum coverage or if a basic plan is sufficient.
Costs
The cost of identity theft insurance varies depending on the provider, coverage options, and other factors. However, on average, expect to pay between $15-$30 per month for an identity theft protection plan.
Some key things that affect the price include:
Coverage amount:
Plans with higher coverage limits for expenses like legal fees or lost wages will have higher premiums. $1 million in coverage is common for high-end plans.
Credit monitoring services:
Plans that include credit reports, credit scores, and credit monitoring as part of the package tend to cost more than basic monitoring services alone.
Additional services:
Extra services like child identity monitoring or social media monitoring can add to the monthly costs.
Provider:
Larger, well-known insurers may charge slightly higher premiums than lesser-known companies.
Policyholder:
Factors like age, location, and credit score can impact premiums as well. Those perceived as higher risk may pay more.
Many providers offer discounts that can reduce the monthly costs, such as:
– Bundling services with existing home/auto policies
– Buying annual or multi-year plans vs. monthly
– Having other products with the same provider
– Qualifying for affinity group or employee discounts
So while costs can vary, most plans range from about $15-$30 per month for solid protection. Comparing multiple providers and looking for available discounts can help find an affordable policy that fits within your budget.
Claims Process
Filing a claim with identity theft insurance is straightforward. Here’s what you need to know about the claims process:
How to File a Claim:
If you become a victim of identity theft, contact your provider’s claims department. You can usually file a claim by phone or through the provider’s website.
Documentation Needed:
Your provider will require proof of identity theft. This usually includes a police report, letters from creditors showing fraudulent accounts, and copies of other documents related to the identity theft. Keep records of all communication and expenses related to the identity theft.
Claim Turnaround Time:
Claims are typically processed within 30 days after submitting all required documentation. Your provider will assign you a claims specialist to guide you through the process. They will let you know if any additional information is needed to complete the claim.
Reimbursements:
Identity theft insurance will reimburse you for many out-of-pocket costs related to identity theft. This can include legal fees, lost wages, credit monitoring services, and more. There are limits to how much you can claim, so review your policy’s coverage details.
Case Closure:
After reimbursing validated costs, your provider will help restore your identity and credit. They will work with you until your identity is fully reclaimed, which may take months or years. The claims process remains open during this time if any new costs arise.
Filing an identity theft insurance claim can relieve much of the stress and financial burden of restoring your identity. Save all related paperwork and be prepared to provide documentation. With an experienced claims specialist guiding you through the process, you can reclaim your identity and recover any costs incurred.
Major Providers
Identity theft insurance is offered by several major insurance companies and providers. Here are some of the top options to consider:
LifeLock
LifeLock is one of the largest and most well-known identity theft protection services. They offer plans ranging from $9.99 to $29.99 per month that include identity monitoring, alerts, and restoration services. LifeLock has high ratings and reviews for their extensive monitoring services. However, some consumers report frustration with getting claims approved.
IDShield
IDShield provides monitoring and restoration services starting at $6.95 per month. They offer individual and family plans. IDShield has positive reviews for fast response times and effective identity restoration. However, their services may not be as comprehensive as higher priced competitors.
IdentityForce
IdentityForce is a highly-rated identity theft company with plans from $17.95 to $29.95 per month. Their UltraSecure plan provides credit monitoring across all three bureaus. IdentityForce is owned by Sontiq, which specializes in identity protection services. Customers praise their US-based customer service.
Identity Guard
This identity theft protection company offers a range of plans from $6.67 to $24.99 per month. Identity Guard monitors credit, public records, and suspicious activity. They have high customer satisfaction ratings. Their claims process is fast and effective. The main drawback is limited family plan options.
Aura
Aura provides comprehensive monitoring and financial fraud reimbursement starting at $10 per month. They partner with TransUnion for credit monitoring. Aura has excellent reviews for proactive monitoring that catches fraud quickly. Restoration services are included with all plans. The main limitation is high monthly rates compared to competitors.
Alternatives
Identity theft insurance provides an added layer of protection, but it is not the only option for safeguarding your identity. Here are some other ways to help prevent identity theft and monitor for suspicious activity:
Credit monitoring services:
Services like LifeLock and IdentityForce provide daily credit reports and alerts of any changes to your credit file. The main benefit is catching suspicious activity early before significant damage occurs. Costs range from $10-$30 per month.
Credit freezes:
Placing a credit freeze restricts access to your credit report, making it harder for identity thieves to open new accounts in your name. Freezes can be temporarily lifted when you need credit checks run. Fees of $3-$10 may apply.
Fraud alerts:
Fraud alerts require creditors to take extra steps to verify your identity before issuing credit. Alerts last for 1 year and can be renewed. Equifax, Experian and TransUnion all offer free fraud alerts.
Identity theft protection services:
Companies like IDShield provide identity monitoring as well as assistance with identity recovery should you become a victim. Plans start around $10 per month.
Antivirus software:
Having up-to-date antivirus software helps detect malware and prevent thieves from accessing your personal data online. Costs vary by product.
VPN service:
Using a virtual private network (VPN) encrypts your internet connection to keep online activity more secure and private. Plans typically range from $5-$15 monthly.
Passwords manager:
Password manager apps generate strong, unique passwords for each account. This makes it harder for thieves to hack accounts. Many free and paid versions exist.
Securing devices:
Always keeping phones, tablets, laptops and computers locked, password protected and encrypted safeguards personal data locally.
While insurance provides monetary compensation for identity theft losses, the other options focus more on prevention and early detection. Weighing the pros and cons of each can help determine the right fit.
Who Needs Identity Theft Insurance?
Identity theft insurance can provide added peace of mind for certain types of consumers who are at higher risk for identity theft and want to prepare for the worst. Here are some examples of who may benefit most from identity theft insurance:
Frequent travelers:
Those who travel often for work or pleasure can be more susceptible to identity theft when they are on the road, using public WiFi networks, and relying on hotels to safeguard personal information. Identity theft insurance can help frequent travelers recover from identity theft more quickly.
Active online shopper:
Consumers who do a lot of online shopping and banking may want the extra assurance of identity theft insurance. Being active online can increase exposure to phishing scams, data breaches, and other cyber threats.
Public figures:
Celebrities, politicians, executives and others in the public eye tend to be prime targets for identity thieves. Their information is often easier to find online, and identity thieves may try to open fraudulent accounts assuming they have good credit and high account limits.
Elderly relatives:
Seniors can be particularly vulnerable to identity theft and fraud. Identity theft insurance can provide assurance to worried family members that elderly relatives will have coverage if they fall victim.
Data breach victims:
Anyone impacted by a data breach at a retailer, bank, or other company they patronize could benefit from identity theft insurance. Even if account numbers are changed, other personal info like SSNs could still be misused.
Home buyers:
Major purchases like a home often require sharing financial information that could get into the wrong hands. Identity theft insurance offers protection during the home buying process.
Military members:
Those serving in the armed forces frequently relocate and travel, so identity theft insurance can provide stability. Specialized plans may offer protections targeted to military life.
Busy families:
From kids’ schools to various accounts for household management, families have a lot of sensitive data floating around that identity thieves may try to exploit. Insurance can save time and hassle if the worst happens.
For consumers in these situations or facing increased identity theft risks, identity theft insurance can provide peace of mind and financial safeguards in case the worst happens. Policies can save hassle, time, and money during identity recovery and restoration.
Drawbacks
While identity theft insurance can provide helpful protection, there are some potential downsides to consider:
High deductibles:
Most policies have deductibles of $100 or more that you must pay out-of-pocket before coverage kicks in. So for smaller cases of identity theft, you may not get much benefit.
Limited risk mitigation:
The insurance mainly helps you recover after identity theft occurs, but doesn’t do much to proactively prevent identity theft in the first place.
Not needed for most people:
Your risk of identity theft may be low enough that insurance isn’t necessary. Good habits like strong passwords, securing your data, and monitoring your credit can be adequate.
May not cover all costs:
Policies have limits on what they’ll cover for lost wages, legal fees, etc. You may still incur some costs during the identity restoration process.
Pre-existing conditions excluded:
If you already had fraud issues on your accounts before getting the policy, that likely won’t be covered.
Cancellation difficulties:
Some insurers make it difficult to cancel policies if you change your mind or find better options.
Overall, identity theft insurance has benefits but also limitations to be aware of. Evaluating your unique risks and costs may help determine if it’s worth getting or not. But good preventative habits go a long way too.
The Bottom Line
Identity theft insurance provides an extra layer of protection by covering out-of-pocket costs if you become a victim of identity theft. However, it has limitations in what it covers and may exclude certain types of identity theft.
The main pros of identity theft insurance are:
– Covers expenses like legal fees, lost wages, and expenses for correcting your credit report that result from identity theft
– Provides access to resources like fraud resolution specialists to help restore your identity
– Gives peace of mind and the ability to recover costs you may incur
The main cons are:
– Doesn’t prevent identity theft, only helps manage the aftermath
– Premiums, deductibles, and coverage limits mean it may not cover all costs
– Typically excludes business identity theft and certain cyber crimes
For most people, taking preventative steps like monitoring your credit and being cautious about sharing personal information will suffice. But for those who want extra protection, identity theft insurance can provide valuable assistance and financial recovery if you do become a victim.
Overall, identity theft insurance is worth considering for those concerned about managing expenses from identity theft and who can afford the additional cost. But don’t expect it to reimburse you for everything if your identity is stolen. Compare policies to find the best coverage and price for your needs.