Identity Theft Insurance – What Is It and Why Do You Need It?
Insurance against identity theft – Definition
You may not be aware of this but many homeowners insurance and renters insurance policies actually cover some aspects of identity theft such as credit card theft or theft of cash. However, this coverage is usually very limited, meaning that the actual financial loss that you incur directly or indirectly as a result of having your identity stolen still has a big impact on your wallet.
A stand alone identity theft insurance goes further and covers the cost that you incur in carrying out damage control. For example, it may cover costs of repairing your credit scores, it may cover phone bills and earnings loss as well. More importantly, if you have to initiate action, such insurance also covers notary and certified mailing costs, the fee that you have to pay your lawyer and more. These insurance policies may also come with a coverage for identity recovery services that can cost quite a bit. The key is for you to understand that, unlike auto insurance or home insurance, the identity theft insurance policy is geared more towards expense reimbursement rather than problem solving the identity loss issue.
Why do you need identity theft insurance?
If there is a risk that you will face considerable losses from an identity theft incident, considering insurance is a good idea. Here are some facts to keep in mind before you sign up for a policy. Understand what is covered in the policy and what is not before you make a final decision. There are some bare bones policies that will only give you coverage for expenses but this may not make a big difference to you.
On the other hand, there are insurers who have a one point contact at their end dealing with your identity theft facts, advising you on what to do immediately after and how to safeguard yourself so that the damage is minimized. This one point contact will also take care of communicating to the right people that your identity has been compromised. In the aftermath of identity theft, you may not have the time or the right mind set to do an effective job in this respect and this can expose you to further risk.
Keep in mind that it is not mere financial loss that you stand to face when your identity has been stolen. It can used by the thief to commit a fraud or any other illegal activity, leaving you liable for crimes that you have not committed. Having a professional and expert by your side in the aftermath of such an incident allows you to protect yourself most efficiently.
Most insurers offer both credit monitoring and fraud resolution and restoration apart from coverage for your expenses incurred after the loss. In such cases, the provider regularly verifies if your data is being used by unauthorized persons to commit financial fraud in your name. If suspicious activity is detected, you are immediately informed, thus reducing your risk and your liability quite dramatically.
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