What Is Identity Theft Insurance And Do I Need It?
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In this day and age, our whole life is managed and stored somewhere electronically. While this provides a great deal of convenience, it also gives cybercriminals more opportunities to steal personal information.
Did you know that identity theft affected over 30% of all consumers in the US in 2017? Just imagine, over $16.8 billion stolen from people just like you. Could identity theft insurance help you avoid becoming the next statistic?
Of course, there is no way to guarantee that you’ll never be a victim of cybercrime. However, there are ways to minimize the chance. Some general safety practices include never sharing your personal information, not clicking on suspicious links or emails asking for personal data, creating strong passwords, and using a password manager.
For heavy mobile users, recommendations include turning off Bluetooth when not in use and always locking your phone.
Another suggestion is to avoid public wi-fi, which is not secure, whenever possible.
Identity theft insurance is a tool to help you mitigate the fallout if your identity has been stolen. It will not reimburse you for the money that you lost. It will, however, help you pay for the costs to repair your credit report and reclaim your identity.
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According to the Javelin Strategy & Research 2018 identity theft report, over 30% of US consumers were victims of identity theft in 2017. This number represents over 16.7 million victims in the US alone. Cybercriminals are not showing any signs of slowing down, so it’s up to us to protect our data, reduce our exposure, and set up systems to reduce the impact of the crime on our life.
One way to protect yourself is Identity Theft Insurance. The policy will not reimburse you for the money already stolen – however, it will assist in recovering and reclaiming your identity. The exact coverage will depend on each policy. The policy may cover:
The identity theft insurance policy will be subject to exclusions, a limit (typically $10,000 – $25,000), and a deductible that you need to pay before coverage kicks in. It will also give you access to a specialist to advise you on the best plan of action and help make sense of the ensuing chaos.
The average out-of-pocket cost to deal with the aftermath of identity theft is almost $3,000 and a whole lot of stress.
As with any insurance policy, it’s crucial to read the fine print and check precisely what is covered. Identity Theft insurance policies are inexpensive and run about $50-$100 a year. They can be purchased either as a stand-alone policy or an add-on endorsement to your current homeowner’s insurance policy. The price usually stays the same whether it’s a standalone policy or an endorsement, but adding the coverage as an endorsement may make managing the policy easier.
Just as cybercriminals become more sophisticated, so must our strategies to protect our personal information. Since everything is done electronically, if someone knows your SSN, password, date of birth, or address, they can do a lot of damage – opening new accounts and taking out loans, just to name a few examples. So what can you do? Consider the below recommendations:
Identity Theft Protection service is NOT an insurance policy. This service is a credit monitoring service that will alert you should anything go wrong. An identity theft insurance policy typically does not provide alerting services.
If you own a home, double-check if your policy includes Identity Theft coverage or if you can add it.
Most major insurance companies such as Liberty Mutual, Farmers, and others offer identity theft insurance policies.
Consider signing up for a credit monitoring service (if not included in your policy).
Have an idea what to do if you are the victim of a stolen identity crime. The steps include setting up a security freeze with all three credit reporting agencies (Experian, Equifax, TransUnion) and filing a fraud alert.
Insurance Broker
As a former insurance broker for over 10 years, Olga has deep knowledge of insurance concepts and policies. She is passionate about helping others understand the insurance policies they are purchasing and find policies that suit their unique needs.
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