What is Identity Theft Insurance?

Identity theft is one of the fastest growing crimes in the United States. Criminals steal personal information such as credit card numbers or social security numbers and use this information to assume the person's identity. They can use their name to open new accounts, apply for loans, and may even take over existing accounts. Many people are never aware that their identity was stolen until a collection agency contacts them for non-payment of items they did not purchase. In other instances, people are turned down for employment or loans because their credit record shows loan defaults they were never aware of. Identity theft insurance can help protect consumers in cases of theft by covering costs associated with re-establishing credit and reimbursement for lost wages.

Insurance coverage for identity theft can be purchased as an option to renters or homeowners policies for a nominal amount. The insurance may also be purchases on its own, though it would cost more.

These policies cover many of the costs that come with restoring credit. Covered expenses may include fees for mailing statements to the three major credit agencies and any other credit agencies the policy holder may have accounts with, making long distance phone calls, obtaining credit reports, and reimbursement of attorney fees.

If time was missed from work due to re-establishing credit, many policies will reimburse wages as well. This is a beneficial coverage point since most offices that the victim might have to visit, such as the Social Security Administration and Department of Motor Vehicles, are generally open on weekdays and time spent waiting in lines and filling out the necessary paperwork is usually lengthy.

Banks offer another type of identity theft protection that is available when opening a checking account. Prices vary depending on the amount of coverage purchased and typically cover the account and any associated credit cards related to the financial institution where the policy was purchased.

Although identity theft insurance can help once someone becomes a victim, it doesn't prevent identity theft. Consumers should take precautions to protect themselves by reviewing credit card and bank statements then following up on any suspicious charges. Personal information should not be provided over the phone unless the person is certain they're speaking with a reputable company. Banks and financial institutions never call customers to ask for personal information since they already have it on file. Change passwords and PINs periodically. Many identity theft experts also recommend getting a copy of credit reports from the three major credit reporting agencies once a year and looking those over for any discrepancies.