Identity theft can affect your finances, your credit, and even your ability to prove who you are. Fixing the damage can also take time and may require help from several different organizations.
What many people do not realize is that identity theft protection may be available through their home insurance. This coverage can help with some of the costs and work involved in restoring your identity.
Identity theft happens when someone steals or uses your personal information without your permission, usually to commit fraud or another crime.
There are many pieces of personal information that a criminal may try to use. This can include your name, driver's licence number, Social Insurance Number, banking information, passwords, or other private information. Once someone has enough information, they may be able to pretend to be you.
For example, they could apply for a credit card, open an account, borrow money, or make purchases in your name. You may not discover the problem until you see an unfamiliar account, receive a collection notice, or notice a change to your credit report.
Identity theft can also create problems beyond financial fraud. In serious cases, someone could use another person's identity when dealing with law enforcement or committing a crime. The result can be a difficult situation to fix.
You may need to contact banks, credit card companies, credit bureaus, government agencies, police, and other organizations. You may also need to replace identification, correct your credit report, or get legal help. This is where identity theft protection can become valuable.
Identity theft protection is coverage that may be available through a home, condo, or tenant insurance policy.
Depending on the insurance company, it may be included in a package or available as optional coverage that you can add to your policy. Identity theft insurance is generally designed to help you recover after your identity has been stolen. That distinction is important.
The coverage cannot prevent someone from trying to steal your personal information. Instead, it can provide financial and professional support when you are dealing with the consequences of identity theft.
Some policies may give you access to an identity restoration specialist. This person can help guide you through the steps needed to restore your identity and correct problems caused by the theft. Other policies may provide access to legal information or help cover certain legal expenses.
Coverage limits and services can vary between insurance companies. Some identity theft packages may also include protection for related risks, such as certain cyber incidents or consumer disputes. This is why it is important to understand what your specific policy provides. Two insurance companies may both offer "identity theft protection," but the coverage may not be exactly the same.
One of the biggest benefits of identity theft insurance is that it may help cover some of the expenses involved in restoring your identity. Exactly what is covered depends on your policy, but there are several types of expenses that may be included.
Legal expenses: Identity theft can sometimes create legal problems. You may need help dealing with debts that are not yours, correcting false information, responding to collection activity, or addressing a judgment that resulted from someone using your identity.
Lost income: Fixing identity theft can require phone calls, appointments, reports, and meetings during regular working hours. Policies may reimburse a portion of the income you lose if you need to take time away from work for covered identity restoration activities.
Replacement identification: If government identification has been stolen, coverage may help with eligible costs to replace those documents.
Credit reports and monitoring: Checking your credit can be an important part of finding and correcting fraudulent activity. Coverage may pay for credit reports or credit monitoring for a set period after a covered incident.
Professional assistance: You may have access to specialists who can help you understand what needs to be done and guide you through the identity restoration process.
Other recovery expenses: Certain costs for things such as postage, courier services, phone calls, transportation, court fees, police reports, or professional services may also be covered.
It is also important to understand what identity theft insurance does not cover.
Identity theft coverage should not be viewed as a guarantee that every dollar stolen from you will be reimbursed. The purpose of many policies is to help pay for eligible expenses involved in restoring your identity and dealing with the damage.
Every policy will have its own coverage limits, conditions, and exclusions. Review these details with your insurance broker so you know what help would actually be available if your identity were stolen.
There is no single price for identity theft insurance. The cost can depend on the insurance company, the type of home insurance policy you have, and the amount and type of protection being offered. Generally speaking, $20-$150/year is a common range.
Identity theft can be much more than someone making a fraudulent purchase. It can affect your credit, finances, personal records, and your time. Identity theft protection through home insurance can provide an extra layer of support when something goes wrong.
As with any insurance coverage, the details matter. Check what your policy covers, the limits that apply, and what assistance you would receive after an identity theft.
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