RISE IN IDENTITY THEFT SPURS NEW TYPE OF INSURANCE
What Is Identity Theft?
Identity theft occurs when a person uses your
personal information, such as Social Security number and date of birth, with
the intent to commit fraud or to aid an unlawful activity. Once personal
information is obtained, the person may open new credit card accounts in
your name, open bank accounts in your name to write bad checks or take out a
loan in your name. Federal law provides a $50 liability limit for the
fraudulent use of credit cards. Because of this, most identity theft victims
never incur a high amount of direct monetary losses. However, restoring
credit and correcting the information is a slow and time-consuming process.
Identity theft insurance is one way to help consumers cope.
What can you do to prevent Identity Theft?
Taking steps to protect your identity is
important. Here are some suggestions:
- Avoid carrying your Social Security
number and driver’s license number together in your wallet.
- Shred pre-approved credit card offers
and bills before disposing of them.
- Avoid putting outgoing mail in your home
mailbox – place it in a U.S. Postal service mailbox.
- Be careful using credit cards online.
Some consumers have a card they use only for online purchases.
- Check your credit report on a regular
basis. If you see unusual activity, you can investigate promptly by
contacting the three credit bureaus: Equifax –
www.experian.com/1-888-397-3742; and TransUnion –
Can You Insure Against Identity Theft?
If you are a victim of identity theft, it can
be very costly to reestablish your credit and identity. Several companies
are now offering identity theft insurance, which generally costs between $25
and $60 per year. Identity theft insurance cannot protect you from becoming
a victim of identity theft and does not cover direct monetary losses
incurred as result of identity theft. Instead, identity theft insurance
provides coverage for the cost of reclaiming your financial identity, such
as the costs of making phone calls, making copies, mailing documents, taking
time off from work without pay (lost wages) and hiring an attorney.
Things To Consider
- Find out what the policy limits are.
Most identity theft insurance policies have policy limits of $10,000 -
- Find out if there is a deductible. Some
policies require you to pay the first $100 - $500 of costs incurred for
reclaiming your financial identity.
- Remember, identity theft insurance does
not cover direct monetary losses.
- If the policy covers lost wages, verify
what limits apply and what is required to trigger this coverage. If you
are a salaried employee or are required to request vacation time in the
event of a work absence associated with reclaiming your financial
identity, you may not have unpaid leave and lost wages.
- If the policy covers legal fees, verify
what limits apply and if legal work needs to be pre-approved by the
Before You Buy
Check to see if your current homeowner
insurer includes identity theft insurance as part of your homeowner’s
insurance. If not, you may be able to add identity theft insurance to your
homeowner’s policy for a small fee or purchase a stand-alone policy from
another insurer, bank or credit card company.
As with any insurance product, make sure you
understand what you are purchasing and compare the product’s price, coverage
and deductibles among multiple insurers.
For More Information on Identity Theft
For ideas and suggestions on how to minimize
the risk of identity theft, or what to do if you become a victim, please
visit the Federal Trade Commission Website at: