If you have an identity, which means everyone on the planet, you are at risk of identity theft. According to the Insurance Information Institute, identity theft is defined as:
“Identity theft is the act of taking someone’s personal information and using it to impersonate a victim, steal from bank accounts, establish phony insurance policies, open unauthorized credit cards or obtain unauthorized bank loans. In some more elaborate schemes, criminals use the stolen personal information to get a job, rent a home or take out a mortgage in the victim’s name.”
If you watch the news or listen to the radio, you will certainly hear accounts of how millions of people are at risk of identity theft because of a data breach at a major retailer, health care provider, or government office. Hackers are more sophisticated today than ever before, and all of us are at risk of financial disaster because our identity has been stolen by a criminal. Typically an identity theft victim will suffer some or all of the following:
• Lower Credit Score
• Loss of time to correct and repair credit records
• Depleted bank accounts
• Delay or loss of tax refunds
• Difficulty getting employment, loans or rental agreements due to credit score
• Cost of legal and accounting fees
No one is immune to identity theft, and, therefore, some type of Identity Theft Insurance should be considered to mitigate the financial risk involved. With the increase in risk of identity theft, the insurance industry has responded by offering affordable insurance products to help offset the cost of identity restoration and prevention. Today, most homeowner insurance policies will either include or offer as an add-on, some type if identity theft coverage but in most cases, the coverage is limited. A stand-alone identity theft policy that is more comprehensive will typically contain the following benefits:
• Coverage for the named insured, spouse, and resident children
• Counseling with a licensed private investigator
• Data breach notifications
• Reimbursement for identity restoration costs
• Credit card activity alerts
• Bank account activity alerts
• Fictitious Identity Monitoring
It’s important to understand that identity theft insurance does not prevent identity theft, although most companies provide free best practice information to help the consumer mitigate their risk. Also, the policy does not reimburse for stolen funds, documents or property. In most cases, the cost of reporting and restoring the consumer’s identity can be far more costly than the actual loss of funds.
