All About Identity Theft Insurance
Perhaps you’ve heard people talk about identity theft as a growing crime. Why, may you ask? It’s a case of thieves becoming smarter and more techno-savvy, technology advancing to the benefit of these fraudsters, and victims still being naive about things.
A lot of us think that we’re all good, identity theft only happens to those who don’t take care of themselves. Guess again, my friends. According to the Justice Department, about four million households were victimized by identity theft in the past year. This means that more than 25,000 individuals are victimized every day of every year. Those are better odds than winning the lottery and this is one chance you don’t want to take.
Many of these cases only involve a stolen credit card number. And that is nothing to sneeze at. But, many involve the more serious crime of stealing your identity by opening accounts and obtaining a fake ID in their name. You would end up paying their bills while they continue requesting credit in your name. How much damage they can do depends largely on how soon you discover the problem.
This just may allay your concerns – there are more and more identity theft insurance companies that may give you the peace of mind you need. Many people are willing to spend a few dollars a month to breath easier and feel their credit and good name are no longer at risk. Most likely you’ve heard about these companies through their solicitations through phone and mail.
Know what you’re buying. Interview your prospective insurance provider and carefully read their terms. Remember that most insurance providers don’t have policies that would protect you from becoming a victim, and should you become one, any direct financial losses are not likely to be covered.
So you may ask what is covered? Coverage is usually limited to a minuscule percentage of your total expenses spent in resolving the issue. These wouldn’t usually be large expenses, as these policies usually only cover postage to mail documents, the cost to make copies of the documents before mailing them out, and phone calls. Some do cover a portion of any legal fees incurred or lost wages due to time away from work while you work on the problem. Others don’t.
Keep track of your expenses while resolving the issue because your insurance deductible could range as high as $1,000 a year. Most deductibles are under $250 depending on the amount of your premium. Most victims of identity theft spend less than $1,500 when trying to resolve the problem, according to the FTC.
The burden of dealing with your creditors ultimately falls on you because they refuse to deal with anyone not responsible for owing the money whether actual charges or bogus.
“Friendly fraud”, or identity theft committed by someone you know, is very common, and unfortunately not covered by most identity theft insurance policies.
You may also want to check if you are already covered by your homeowner’s policy. Some credit card companies provide ID theft insurance for free if using their card and some will notify you if there appears to be unusual activity on your card.
Whether identity theft insurance is a viable option for you or not, you will need to closely monitor things and keep ID theft at bay. Even the little things like only giving out the last four digits of your social security number (for verification only) and shredding sensitive documents can help.
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