Identity theft poses a clear and present danger to everyone now days. Our personal data is not as secure as we would like to believe. Perpetrators can steal our mail or hack into our personal or company’s computer network to obtain our name, address, bank account, credit card and Social Security and other identifying information or data.
The repercussions of identity theft can be devastating. Identity theft criminals have been known to rack up six-figure credit card debts, secure loans and purchase homes and firearm supplies in their victims’ names. It’s not just the anguish of watching your hard-earned money evaporate, but also the additional costs of restoring your reputation and correcting your credit in the aftermath of the crime. That’s a double blow, and it can be a big one at that!
Different Ways in Which Identity Theft Is Committed
The tools to steal information are readily available. In 2011, a couple was charged with gathering several individuals’ credit card information using skimming devices from websites that illegally collected visitors’ personal data, ultimately swindling them for $13 million in total.
In ‘shoulder surfing’, criminals observe us or eavesdrop on our conversations while we’re entering or giving out our credit card information when making purchases or reservations in public.
Petty criminals, known as dumpster divers, don’t mind getting their hands dirty by digging into garbage bins or neighborhood dumpsters to obtain bank statements, copies of checks or other personal records. They use the information to forge checks or withdrawal slips from your bank account.
A popular modus operandi of hacking into businesses – as evidenced by the more recent data breaches at Target, Verizon or Anthem – have also raised concerns about the growing sophistication of identity theft, which is predicted to become a leading form of property crime.
One way to soften the blow of identity theft is to buy identity theft insurance. More and more, Americans are turning to this insurance product to seek some relief from the financial setback suffered due to identity theft.
What Exactly Is Identity Theft Insurance?
Identity theft insurance is not a typical insurance product in that it will not cover the monetary losses incurred through identity theft nor can it protect a person from falling prey to the crime. Instead, it reimburses an individual for the costs they incur in reclaiming their identity. Among those costs are: lost wages, phone bills, mailing documents, making copies, attorney fees and notary costs, all of which can add up quickly when you consider the time involved in having to reclaim your identity.
Who offers identity theft insurance?
Insurance companies sell identity fraud policies through independent insurance agencies, credit bureaus, banks and credit card companies. It’s not uncommon that identity theft insurance may be offered as a rider to homeowners or renters insurance policies.
Questions to Ask When Perusing Identity Fraud Policies
Limits: Identity theft insurance will reimburse expenses up to the limits provided by the policy. The coverage limits can range from $10,000 to $1 million. Some policies may also provide an emergency cash advance if the theft has occurred while you are traveling. It is advisable to review the restrictions, terms and conditions that apply to the limits and features of the policy before zeroing in on one policy.
Deductible: Some identity theft insurance policies do not have a deductible while others may charge a high deductible. If the coverage is included in a home insurance policy, individuals may be required to pay the home insurance deductible. Javelin Strategy & Research puts the average out-of-pocket costs for a victim of identity theft at $952 (2012 estimates); double that amount for individuals who’ve had their accounts completely taken over.
Lost wages: In some cases, the policy may reimburse individuals for lost income if they have been forced to take time off from work to get their finances in order. If lost wages are covered, it’s important to understand the limits that apply and the conditions triggering coverage.
Legal expenses: Most policies set limits on the amount of legal expenses that can be recovered; it’s important to know those limits and confirm whether the insurer will need to pre-approve or authorize what legal work is covered.
Other services/assistance: Restoring credit and rectifying information after identity theft is often a time-consuming affair. It makes sense to inquire if the insurer will provide a case manager to assist with recovery or just offer a checklist of things-to-do.
The time between discovering identity theft and resolving the incident can be very stressful. A good identity fraud policy with assistance from a friendly, patient and seasoned independent insurance agent can help reduce that stress and provide reassurance that the necessary corrective actions are being taken to resolve the situation.