Identity theft insurance can help you get your life back

Jill Overmyer

The thought of someone gaining access to your personal information and then using it for financial gain is frightening. The bank may refund your money the thief drains from your bank account. Yet things like replacing all your credit cards, getting a new driver’s license and correcting your credit record will cost you both money and time. Identity theft insurance can help you recoup some of those costs.

Identity theft insurance can help you get your life back
Identity theft insurance can help you get your life back

What is identity theft insurance?

Identity theft insurance covers some of the costs of getting your life back in order after your identity has been stolen. This type of coverage won’t cover the money stolen from your bank account. That’s up to you and your bank to work out. Things it does cover include the following, according to the Insurance Information Institute:

  • Phone bills. You’ll spend a lot of time on hold with your bank and the credit bureaus.
  • Lost wages. You might have to take time off work to deal with paperwork and visits to the DMV.
  • Notary and certified mailing costs.
  • Legal fees. Not all policies cover them.

Some home insurance companies offer identity theft insurance as part of their coverage, according to the Insurance Information Institute. If it’s not included, you may be able to purchase it as a home insurance endorsement. Or you can buy a stand-alone policy from a company that does offer it. Identity theft insurance generally costs about $25 to $50 a year, according to the Insurance Information Institute.

Questions to ask your insurer

Before signing up for identity theft coverage, the National Association of Insurance Commissioners (NAIC) recommends asking the following questions to make sure it’s worth the premiums:

  • What are the policy’s limits? Most policies generally have limits of about $10,000 to $15,000, according to the NAIC.
  • Is there a deductible? You could end up paying the first $100 to $500 out of your own pocket before coverage kicks in.
  • What limits are there regarding lost wages? For example, your policy might first require you to exhaust all your vacation time before it covers lost wages.
  • Does legal work need to be approved ahead of time by the insurer? Even if your policy covers legal fees, it might require you to get the insurer’s stamp of approval before you hire legal help.

Prevention tips

An identity theft insurance policy is just the second line of defense. The first is common sense and caution. Here are some tips for preventing identity theft from the Insurance Information Institute.

  • Shield your PIN. At the store, ATM or bank, cup your hand around the card reader as you enter your code. You may feel overly cautious, but there are those who can steal your PIN by simply peeking over your shoulder.
  • Don’t keep your wallet full. Keep only the cards you regularly use. Be sure you know where all of your cards are.
  • Be alert for phishing schemes. Never share information like your birth date, mother’s maiden name or Social Security number. Remember that banks and other financial service providers won’t ask you for your PIN or passwords by email or instant message.
  • Install a security system on your computer. Install a firewall, and use anti-virus protection.
  • Don’t throw your receipts away in public trash bins. A thief can mine them for information.
  • Use a shredder. Thieves will go through trash to find personal identifying information. You can thwart their search by shredding all financial and medical documents.
  • Keep an eye on your credit report. If you see something out of the ordinary, report it immediately.

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