Identity theft insurance is a type of protection service designed to protect individuals against the cost of being the victim of identity theft. Identity theft happens when someone illegally obtains and uses another person’s personal information, such as their name, credit card, social security number, and bank account, typically intending to commit financial fraud.
Identity theft insurance policies do not prevent identity fraud. Still, it does provide financial reimbursement to victims for the costs incurred in restoring their identity and repairing their credit scores and credit reports. These costs may include phone bills, lost wages, notary and certified mailing costs, legal expenses, and sometimes even monetary losses.
Identity theft protection services often include assistance with the recovery process by providing a case manager to the victim of fraud who guides them in contacting credit card companies and major credit bureaus, filing police reports, and filing out the necessary paperwork. It may also include identity monitoring services and fraud alert services that notify the insured if their personal information is compromised. Credit monitoring services can also be helpful to identify fraudulent charges, loan applications, or suspicious activity in credit reports.
It’s important to note that Identity Theft Insurance typically comes with a deductible, meaning the insured must pay a certain amount out of pocket before the insurance coverage kicks in. The specific coverage details, including the deductible and policy limits, can vary widely depending on the insurance provider and the specific policy.
Here are some safety steps you can take to minimize the risk of becoming a victim of identity theft:
- Safeguard personal information: Never carry your social security in your wallet. Shred documents with personal or financial information before discarding them. Store important documents in a safe place.
- Monitor financial statements: Regularly review your bank account and credit card statements to identify suspicious activity.
- Create strong, unique passwords: Change your passwords regularly and avoid common passwords like “password123”. Consider using a second method of verification or a password manager.
- Be cautious online: Avoid any dark web activity or providing your personal information to unsecure websites.
- Beware of Phising scams and Phising attacks: Be skeptical of unsolicited phone calls or emails asking for personal information or financial information.
In conclusion, Identity Theft Insurance is a financial safety net that helps individuals recover from the financial and logistical burden of identity theft. It is often offered as an add-on to homeowners' or renters' insurance policies but can also be purchased as a standalone policy.