Identity Theft Protection

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Interest in identity theft insurance has skyrocketed over the last couple of years as more and more people become aware of the threat of this type of crime and the number of victims continues to rise.  Some critics say it’s a wase of money while others say it’s a small cost to pay for what could be a costly problem.  Should you get identity theft insurance for yourself and if so, what do you need to consider before getting any?

Before actually getting some identity theft insurance you should check with your bank and credit card company to see what cover, if any, they offer. As the problem of identity theft grows some financial institutes are recognizing the worry it causes their customers and include some form of identity theft insurance with thier banking or credit business.

If they don’t or you don’t feel it is adequate cover so you want to get an identity theft insurance policy you need to remember that like with many other types of insurance policies, you can pick and choose what type of actual coverage you get and that it doesn’t actually fix the problem of identity theft.

Many assume that identity theft insurance means that the insurance company that carries the policy will fix any problems of identity theft and deal with their credit card companies, bank, and so on for them.  In reality, the insurance company doesn’t fix identity theft any more than your car insurance company will take your automobile to the body shop after an accident.  Instead, identity theft insurance means that you will be reimbursed by the company for costs and expenses incurred if you are a victim of identity theft. 

The typical identity theft insurance policy covers fraudulent credit card charges or cash lost from a bank account.  You may also be reimbursed for lost wages; very often the type of business you need to handle when you’re a victim of identity theft needs to be handled during the day, so you may need to take time off from work.  For more serious cases of identity theft, you may need to hire an attorney to handle some things for you, so most identity theft insurance covers reasonable attorney fees.

There may be other expenses associated with correcting information on your credit report or for handling things with your bank.  As with other types of insurance, you can pick and choose what is covered with identity theft insurance so read policies carefully.  It’s reported that the average victim of identity theft spends around $800 correcting the problem, so be sure the policy is priced low enough to justify the expense; you also want a very low deductible.  If it costs you $800 to correct identity theft but you have a $500 deductible and are paying $25 per month for your policy, you may actually wind up paying more for the identity theft insurance than it would cost you to actually correct the problem in the first place!

Only you can decide if identity theft insurance is right for you; as with anything else it’s important to look over your options carefully and make an informed decision.  Usually the company that handles your homeowner’s or renter’s or car insurance can offer such a policy and you may be eligible for a discount by having all your policies with one company.

It will certainly be a lot cheaper than signing up with one of the identity theft protection companies such as Lifelock. Yes they offer a $1 million guarantee as a type of identity theft insurance cover for you but that is slightly misleading and one of the reasons they have several outstanding court cases to deal with. The guarantee’s small print says they will reimburse you for any losses caused by an identity theft up to the cost of $1 million.

It simply means that if someone spends $500 on your credit card and the card company don’t offer identity theft protection, Lifelock will give you the money back.

Weigh your options when it comes to identity theft insurance and make your decision carefully.