As America’s fastest-growing crime, identity theft is a high-profile media topic. In fact, entire industries have recently evolved in response to this huge economic threat. Insurers have not hesitated to join the bandwagon with a novel innovation to a new-age problem: Identity theft insurance.
How ID Theft Insurance Works
Like other insurance products, identity theft coverage is a form of loss protection. Should disaster strike, homeowner and auto insurers restore your pre-loss financial position by funding the replacement or repair of your property.
Likewise, ID theft insurers offer economic restoration following compromise or misappropriation of your personal identity. Potential identity theft fallout includes credit ruination, bank account depletion, and even erroneous arrest. In addition, ID theft victims may sustain major indirect costs for legal fees, lost wages, and tarnished reputations.
Comparing Coverage Costs
Very keen competition exists among insurance carriers. Also, a growing number of mortgage and credit card companies now offer identity theft insurance. To make the best choice, look for the following features in any proposed policy:
- Deductible: Policies with exorbitant deductibles are usually unfeasible. Studies by the Identity Theft Resource Center reveal that victims incur average out-of-pocket costs of slightly over $800. A deductible in excess of this amount makes a policy impractical.
- Legal Expenses:Adverse litigation, wrongful arrest, and having to retain legal counsel are potential consequences of identity theft. Verify that attorney’s fees and court costs are included in the policy’s provisions.
- Denied Credit: Victims often do not even realize that an identity thief has targeted them until they are denied new credit. Ascertain that credit denials and negative credit file deletions are covered.
- Lost Wages: Lost income coverage is indispensable. The FTC estimates that ID theft victims spend an average of 320 hours on rectifying consequent problems. This equals two months’ pay for most people.
- Premium: Identity theft insurance premiums average about $20 monthly. Seek a quote from your present auto, life, or homeowner’s insurance carrier first. Odds are you will qualify for multiple coverage discounts that may essentially make the choice for you.