Do I need identity theft insurance?

By Jen Phillips

A report released in February 2017 showed that identity theft reached an all-time high in 2016. More than 15 million people were victims of some kind of fraud related to stealing their identities, up from 13 million the year before, according to Javelin Strategy & Research.

If the statistics sound alarming, the reality of discovering your identity has been stolen is even worse. When someone steals your personal information and uses it to set up accounts in your name, or “clones” your credit card to make unauthorized purchases that show up on your bill, it can feel distinctly personal — even though it’s likely you never even interacted with the person or group that is doing the stealing.

It can be difficult and costly to undo the damage done by identity theft, and some consumers have spent months or years trying to repair credit histories that were affected. As a result, many are now turning to identity theft insurance.

Identity theft insurance

Homeowners insurance and renters policies typically cover the theft of money and credit cards from the insured residence, but there are generally limits on the amount of cash a policyholder may claim was stolen. Credit card companies typically have a $50 cap on unauthorized charges — and many are instituting sophisticated fraud-detection systems that will notify the cardholder of suspicious charges.

Given the prevalence of identity theft, some carriers are now offering identity theft insurance either as part of their coverage or as a separate option. According to the Insurance Information Institute, this insurance often covers costs associated with repairing financial records and credit history after identity theft has been detected — including things like lost wages, notary and certified mail costs, and in some cases, attorneys’ fees. Check with an agent or the insurance company to see if this is coverage is offered.

Ways to protect yourself

The variety of methods to steal identities seems to be constrained only by the creativity of criminals. From “skimmers” installed on legitimate ATMs, to “phishing” schemes, to the previously mentioned cloning (creating duplicate/fake cards), consumers must be on the lookout for anything that seems odd. Here are some things you can do to protect personal information:

• Know how to spot “skimmers.” These are fraudulent devices that can read and record your bank card’s magnetic strip. Criminals install them on top of legitimate card readers, such as ATMs and gas pump card readers. Once obtaining a card number and PIN, criminals can create a “clone” card and use that anywhere a card is accepted.
• Cover the keypad with your opposite hand when entering in your PIN — this will prevent a camera from recording your number if there is a skimmer.
• Don’t keep your social security card or number in your wallet or purse — only carry your card with you when you know you will need to present it
• Don’t write your PIN on your bank card, or carry it in your wallet.
• If you shop online, make sure that you are using sites that are secure. Look for the “https” and a padlock symbol at the web address line.
• Be extremely wary of emails from your financial institutions or any companies with which you have accounts, especially if those emails prompt you to follow a link to change your password. When in doubt, call and ask before making any changes to your login credentials or accounts.
• Check your bank and credit card accounts regularly, and your credit report annually. Consider putting a fraud alert on your credit report — this will make it more difficult for someone to open an unauthorized account in your name.

Above all, exercise caution. When it comes to identity theft, it’s better to be safe than sorry. Identity theft can be very damaging to your credit history, which can affect everything from your ability to secure a mortgage or a job to the amount you pay on loans or your insurance premiums.

The content on this site is offered only as a public service to the web community and does not constitute solicitation or provision of legal advice. This site should not be used as a substitute for obtaining legal advice from an insurance company or an attorney licensed or authorized to practice in your jurisdiction. You should always consult a suitably qualified attorney regarding any specific legal problem or matter. The comments and opinions expressed on this site are of the individual author and may not reflect the opinions of the insurance company or any individual attorney.