Identity theft insurance
Having your identity stolen can lead to severe consequences, including charges added to your credit card, new credit cards being opened in your name and damage to your credit score. Beyond that, reclaiming your identity may take significant time and money paid out of pocket. Identity theft insurance coverage can help reimburse you for many of the potential financial losses while helping you restore your credit. Bankrate’s insurance editorial team explains what you need to know about identity theft insurance.
What is identity theft insurance and what does it cover?
You may be wondering: does homeowners insurance cover identity theft? The answer is usually no. The personal property coverage of a homeowners insurance policy offers little protection against most identity theft. Typically, home insurance policies only cover the theft of belongings such as clothing and furniture.
Most homeowners policies also cover the theft of a limited amount of cash. For example, if a burglar steals your wallet, your home insurance might reimburse you for the money it held, typically limited to a few hundred dollars. But if the thief uses the personal information obtained within the wallet to get a car loan, your homeowners policy will likely not come to the rescue.
That said, identity theft often goes far beyond the initial monetary losses. When a fraudster uses your credit card to buy an airline ticket, you can cancel the card and request a new one. Oftentimes, the credit card company will reimburse you for any monetary losses following a short investigation. But other types of identity theft can cause serious (sometimes lasting) damage to your finances and credit rating. You may have to hire an attorney to help restore your credit standing or fight civil judgments resulting from fraudulent accounts opened in your name.
Identity theft coverage home insurance is available from most major carriers as a rider or endorsement to a homeowners policy and a few include it in standard home policies. Identity theft coverage varies widely, from reimbursement of stolen funds to a host of services to help repair the financial damage.
Identity theft policies may include:
- Assistance of a fraud specialist
- Credit monitoring services
- Reimbursement of lost wages caused by taking time off from work to restore your credit or reclaim your identity
- Aiding with civil judgments, criminal charges, audits or hearings related to fraud perpetrated by the “imposter”
- Professional assistance in reclaiming your identity and restoring your credit
- Reimbursement of costs involved in replacing identification documents, such as a driver’s license, passport or Social Security card
- Reimbursement of audit and account application fees
- Reimbursement of attorney’s and court fees associated with civil judgments
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Which insurance companies offer identity theft protection?
Most major home insurance companies offer optional identity theft coverage. You may even be able to add identity theft insurance when submitting information for an online quote. According to the Triple-I, adding this coverage to your existing homeowners policy typically costs less than $50 per year. The best types of identity theft insurance include reimbursement for fraudulent charges or stolen funds, plus credit monitoring.
Allstate
When you purchase an Allstate home insurance policy, you can add its optional identity theft protection, which offers a comprehensive collection of benefits. Allstate’s Digital Footprint service collects data from all your accounts and alerts you if someone opens a new account in your name or when your data is breached. Allstate also monitors your credit, financial and social media accounts and alerts you if your information appears on the dark web, where criminals buy and sell stolen data. If a fraudster targets you, Allstate will cover up to $1 million in reimbursements for money stolen from your bank account, depending on which identity theft plan you choose.
Learn more: Allstate insurance review
Amica Mutual
Amica’s identity fraud coverage pays up to $15,000 in expenses you incur resolving identity theft issues, including legal fees, lost wages and notary fees. Amica also provides policyholders professional identity theft assistance, along with credit monitoring. The company will help you file a police report and affidavits if necessary, and you will receive credit and fraud monitoring for a year if your wallet or handbag is stolen.
Learn more: Amica Mutual insurance review
State Farm
State Farm’s Identity Restoration Insurance reimburses up to $50,000 in necessary expenses related to identity theft restoration, including application fees, attorney’s fees, auditing costs, civil judgments, court costs and credit report fees. You can also add cyber attack and cyber extortion coverage, which pays up to $15,000 in expenses incurred to retrieve your data if a ransomware program hijacks your computer.
Learn more: State Farm insurance review
The Hartford
The Hartford’s optional Identity Fraud Expense Coverage reimburses you for up to $25,000 worth of expenses related to fraud and identity theft. You can beef up your protection by adding The Hartford’s Identity Restoration Services and ID Hotline coverages, which include the services of fraud specialists.
Learn more: The Hartford insurance review
Is identity theft insurance worth it?
The threats of today’s online world demand all types of protection. Because of the sensitivity of people’s private information, such as Social Security numbers, bank accounts and passwords, services are available to protect you from identity theft in case leaks happen. Identity theft insurance is generally very affordable, especially when you add it as a rider or endorsement to your homeowners policy.
Identity theft insurance may not be for everyone. You can take steps on your own to protect your identity, such as setting up randomized passwords and regularly checking your credit report.
Furthermore, because reimbursement for stolen money and other assets is generally not covered under most policies, you may end up spending thousands of dollars reclaiming your identity and restoring your credit if it is stolen. But for a nominal additional monthly cost (with many companies), you could feel more at ease knowing your sensitive information is being monitored and help is available in case something goes awry.
Alternatives to identity theft insurance
Although identity theft insurance may prove beneficial, it is not the only option you have to protect yourself and your information. Identity theft insurance can help cover the cost of reclaiming your identity and restoring your credit following a fraud incident. Still, you can also take steps to prevent becoming a victim.
Spot identity fraud yourself
By following a few simple steps, you may be able to prevent and identify digital fraud without external assistance. These steps include regularly checking your financial statements for unauthorized transactions, enabling two-factor authentication for online accounts, and avoiding the sharing of personal information with suspicious parties like scam emails and telephone calls.
Use free resources
To prevent identity fraud, there are a few resources that all consumers can access free of charge. Setting up fraud alerts through any one of the three national credit bureaus (Equifax, Experian and TransUnion), requesting an identity protection PIN from the IRS when filing tax returns and implementing a credit freeze with the major credit bureaus in case of suspected identity theft are some of the ways to prevent and spot suspicious activities associated with online accounts.
Get an identity theft protection service
When you have multiple online accounts, keeping an eye on them can be extremely challenging and time-consuming. Purchasing a cyber identity theft protection service could be very beneficial in such cases. These services monitor your online activities and alert you of suspicious activity associated with your personal information. The most popular cyber protection services include:
- Aura: This company was Bankrate’s 2023 pick for best all-in-one system. Aura comes with a large set of tools designed to fight cybercrime. Aura protection includes a password manager, credit inquiry alerts, malware blocking and a virtual private network (VPN).
- Norton LifeLock: This combines antivirus protection along with identity monitoring service. LifeLock alerts you when it detects suspicious activity that may threaten your personal data and reimburses you for up to at least $25,000 in stolen funds, depending on the plan you choose. LifeLock’s service includes Norton antivirus protection along with identity monitoring service. LifeLock alerts you when it detects suspicious activity that may threaten your personal data and offers identity and social security number alerts for all plans.
- Identity Guard: An identity theft protection service brought to you by IBM, Identity Guard scans the web for your personal information, gives you tools for safe browsing, as well as $1 million in identity theft insurance. You can also monitor your credit activity through all three credit bureaus with its Total and Ultra plans. Cyber protection services can monitor your online activity and alert you of suspicious activity associated with your personal information.
- TransUnion Identity Protection: This service is offered by TransUnion and provides up to $1 million in identity theft insurance. You also get access to various credit tools, including three-bureau credit monitoring, quarterly credit report and score updates, a credit simulator tool and a credit score tracker. The monthly fee also covers dark web monitoring, and you’ll get bank and credit card activity alerts.
- IdentityForce: A top-rated cyber protection service, IdentityForce includes a smart SSN tracker, bank and credit card activity alerts, dark web monitoring and $1 million in identity theft insurance. Higher levels of protection include three-bureau credit monitoring, a credit score tracker and credit score simulator.
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