Protecting Yourself from Identity Theft
As part of National Credit Education Month, we would like to look at one of the biggest threats (outside of our own behavior) to our credit rating: identity theft. By now you should be familiar with the basics of protecting your identity; shred personal documents before tossing them, keep different passwords for each website you use, and so on. However, as identity thieves increasingly become more sophisticated, the old advice is not enough anymore. That’s why the insurance industry has developed identity theft insurance.
Identity theft insurance is designed to cover all of the monetary losses that you or companies you interact with could suffer because of your stolen identity. For example, if someone steals your credit card and spends $13,000 of your money at Amazon.com, the insurance will cover that money. It does not come out of your pocket OR Amazon’s. It may also cover:
- Legal fees you have to pay to defend yourself should the crime go to court
- Telephone, Internet, and other communications costs for time spent reporting the incident to various companies and following up
- Rejection fees for any loans or other financial offers that some thief applied for under your name
- Lost wages for time spent in court, reporting the incident and dealing with follow-up, or otherwise spent recovering from the identity theft
As with other kinds of insurance, the coverage varies from policy to policy and better coverage will generally cost more. The most basic policies cover only your credit card expenses. Others policies will include everything listed above and more. Just like with any other kind of insurance, depending on the details of the coverage you ask for (and they do include options like deductibles, various riders, and so on), you will be charged a monthly premium that will reflect the level of coverage you have selected.
There is a lot to lose if your identity is stolen and identity theft insurance dramatically reduces the damage. With a growing number of consumers having their identities stolen every day, it is best to look into this type of insurance sooner rather than later.
