What does it cover? And is it necessary to purchase additional Identity Theft Coverage?
Most homeowner’s insurance policies offer identity theft coverage for a minimal premium (average $25/year). Most provide between $15,000 and $25,000 in coverage and there is usually a small deductible associated ($250 on average). Some policies will include access to an advocacy representative to help you navigate the process which can be very helpful. Other expenses that are typically included within the endorsed coverage limit are:
- Costs for notarized fraud affidavits, certified mail, and long distance telephone calls to law enforcement and credit rating agencies
- Loan application fees when required to reapply for a loan denied due to identity theft
- Reasonable fees for attorneys hired to defend against lawsuits, to remove wrongly entered criminal or civil judgments, or to challenge the accuracy or completeness of information in your consumer credit report
- Lost wages at $250 per day up to $10,000 when you take off work to meet with law enforcement agencies, legal counsel or similar related activities
Every homeowner’s insurance policy can have varying coverage, so it’s important to read your policy to see what scope of coverage exists.
There are also many other independent companies as well as banks and credit-reporting bureaus selling Identity Theft Protection or monitoring. No doubt you’ve seen the commercials. But, is it necessary to have $1M in coverage? What does the $1M cover? Most of these policies are secondary/excess to the coverage that you have added to your homeowners (or renters insurance) policy.
Typically only low-cost incidentals related to or resulting from the crime are covered (eg notary fees, credit-report costs, loan re-application fees, and usually a maximum of $1,500 in wages lost “solely” to fix your identity records). If you need criminal defense costs paid, because you are charged with a crime committed by the person that stole your ID, most policies will pay after you have been acquitted, or the charges have been dismissed. You could also end up having to front the defense costs.
Not all policies are created equal! You should ask as many questions as possible and read all of the fine print to make sure you understand exactly what you are buying and then check with the Better Business Bureau. An informed buyer is the best buyer!
Below are some pro-active, no cost, common sense actions that you can take to prevent ID theft in the first place:
- Sign up for online access to your bank and credit accounts and monitor them frequently. Chances are, you’ll identify illegal activity before the ID theft service will.
- Periodically check your credit reports.
- Put a security freeze on your credit report. This prevents new creditors from getting access to your file when someone tries to open an account. When creditors do not have access to the file, they are more likely to deny a fraudulent credit application.
- Install and use security software on all of your computers and your phone.
- Besides the credit report bureaus, you can check the following databases each year, free of charge:
- Lexis Nexis Full File Disclosure (www.personalreports.lexisnexis.com, and then choose “Access Your Personal Information”)
- Annual Statement of Medical Benefits (call or write your current insurer to get a copy of your statement)
- Prescription Drug History contains info about the prescription drugs you’ve used over the past five years (call Intelliscript at 877-211-4816 and Medpoint at 888-206-0335)
- Chex Systems and TeleCheck Reports have info regarding overdrawn or mishandled checking accounts (Chex Systems – www.consumerdebit.com,and click on “order consumer report”, TeleCheck –www.firstdata.com/telecheck/telecheck-request-file-report.htm)
