Identity theft insurance is a type of insurance policy that can help victims recover from losses caused by identity theft. It may be offered as a standalone policy, or as a benefit with other types of insurance or identity protection plans.
Not all identity theft insurance policies offer the same level of coverage. If you’re considering identity theft insurance, it’s important to understand the types of losses that identity theft causes and what losses identity theft insurance policies may cover.
How Identity Theft Creates Loss
There are many ways your identity can be stolen. Criminals may attempt to gain access to your bank account information, Social Security number and other personal information. With this information, they may try to impersonate you to open credit cards in your name, empty your bank accounts, take out fraudulent loans, receive medical care and more.
In 2019, fraud resulted in over $3.5 billion in losses for consumers. And losses don’t just come in the form of stolen money. Identity theft victims may incur thousands in out-of-pocket costs, including hiring attorneys or consumer fraud specialists, replacing stolen identification, filing civil suits, participating in criminal cases and other costs. Costs range from minimal to exorbitant depending on the extent of the fraud and the steps needed to deal with it.
For victims, dealing with identity theft can also be time-consuming and result in lost wages or other financial consequences as they focus on recovering their identity.
What Identity Theft Insurance Can Cover
Identity theft insurance can help victims restore their identity and recoup losses caused by fraud. Policies may cover monetary losses directly due to fraud and out-of-pocket costs such as attorney’s fees. They can be offered as part of a larger insurance policy or as a standalone policy.
While homeowners’ and renters’ insurance policies often provide some level of coverage for lost or stolen cash and credit cards, they may not cover any additional expenses or losses related to recovering from identity theft. As for what standalone policies cover, it can vary from policy to policy.
In short, identity theft insurance policies may only cover initial losses, or they may include subsequent costs as well. It’s important to review any policy carefully to make sure you’re getting the level of protection you need.
Underwritten by AIG, IdentityIQ covers up to $1 million in losses for the primary policyholder. Covered losses include funds stolen through unauthorized bank transfers from personal accounts, legal fees and other expenses related to identity recovery and up to $1,500 a week in lost wages for up to five weeks as the policyholder deals with resolving a stolen identity. Terms and conditions apply.