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Identity theft insurance is a protective financial product that's designed to cover the expenses that you may incur after being defrauded. The right policy can not only save you money, but time and energy as well. Here's what you need to know about identity theft insurance and how to shield yourself from falling prey to fraud.
How Does Identity Theft Insurance Work?
Identity theft can occur in several ways. Someone may steal your credit or debit card—or just the account numbers—to make purchases. Other thieves obtain information about you by gaining access to the computer systems where companies keep their customers' personal and financial information (a data breach). Once they have your information, they may be able to drive up your account balances, open new credit cards or take out loans in your name.
Some crooks use phishing scams to lure you into revealing your information. These involve sending emails or texts that look like they're from legitimate companies, asking you to provide your personal and banking details for updates or promotions.
No matter the method used—you'll be the one stuck with the bill and any credit problems that might result.
This is where identity theft insurance comes in. Depending on the policy, it can help with a wide variety of circumstances involved in clearing up the matter, including:
- Lost wages: If you take time from work to fix identity theft issues, the policy can replace the income you didn't earn.
- Notary fees: You might need to get documents authorized by a notary, who will verify signatures on paperwork you need to send. The policy will likely cover the cost.
- Mailing costs: To ensure documents end up in the right place, you'll want to send them certified mail, return receipt requested. Identity theft insurance will usually pick up that cost.
- Phone bills: If you incur any phone-based expenses as you're dealing with this issue, they may be covered.
- Child care: If you need to pay someone to mind your children while you rectify the problems associated with identity theft, some insurance policies will even cover the cost of child care.
- Credit monitoring: A credit monitoring service will find out if your information is for sale, and will let you know if fraud is detected. Identity theft insurance typically includes it in the plan.
- Legal fees: Attorney and court costs may result from identity theft problems, and they can rack up fast. Many identity theft insurance policies cover them.
How to Get Identity Theft Insurance
There are a number of companies that offer identity theft insurance. It may be available from your homeowners or renters insurance, and some companies offer it as their sole product.
Experian's Identity Theft and Credit Protection Service comes with a variety of valuable services designed to safeguard your credit file:
- Identity theft monitoring and real time alerts: If fraud is detected, you will receive an immediate notification.
- Dark web surveillance: Experian's proprietary technology can detect stolen personal data on over 600,000 dark web pages, file-sharing sources, forums and other places your data can turn up.
- Three-bureau credit monitoring: Unexpected changes to your credit reports can be a sign of identity theft. Experian monitors all three credit bureaus (Experian, TransUnion and Equifax) to identify credit inquiries, new accounts, account balance changes and credit utilization.
- Up to $1 million in identity theft insurance: The policy will cover the cost to replace stolen funds linked to unauthorized electronic transfers, as well as lost wages.
- Ability to easily lock and unlock your credit file: You'll be able to lock your Experian credit file to help stop unauthorized credit activity, then receive real-time alerts if anyone does try to apply for credit in your name while it's locked.
- Fraud resolution support: Dealing with this crime is stressful, so Experian has U.S.-Based fraud resolution specialists you can reach out to for help resolve any identity theft problems.
How to Reduce Your Risk of Identity Theft
It's comforting to be protected by an excellent identity theft insurance policy, but reducing the risk of identity theft from occurring in the first place is also something you should do.
- Make sure you use strong passwords. They should contain at least eight characters, containing a variety of upper and lower case letters, numbers, and special characters. Never incorporate names, birthdates, phone numbers or email addresses, and use a different password for each site.
- Be attuned to phishers. If you get any form of communication from a bank, utility company, or any other business or individual asking you to update your data by clicking a link or requesting your Social Security number and other personal information, delete the message immediately. Visit the real site, call the official number, and ask if they reached out. If they didn't, inform them of the problem.
- Protect your personal documents. Have statements sent electronically rather than by hard copy. Lock your mailbox or use a post office box, shred anything that has your private information on it. Invest in a safe deposit box and store all important documents in it.
- Purge your data from all devices before you sell or dispose of them. Use a wipe utility program that overwrites the entire hard drive. Even if a drive is damaged or doesn't work, the data may still be accessible.
Even if you're already following those tips, it's a wise idea to check your credit reports often. Read them carefully, looking for anything that seems amiss. Or sign up for free credit monitoring with Experian. You'll obtain notifications about suspicious activity, inquiries and new accounts, plus any changes to your personal information.
If you believe that identity theft activity might already have occurred, place a free fraud alert on your credit file. It can help prevent identity theft from open accounts in your name because the fraud alert will notify a creditor that you've been a victim of fraud and ask them to verify your identity before processing an application. A temporary and active-duty fraud alert lasts one year, but if you're already a victim and submit a copy of an identity theft report, you may request an extended fraud victim alert, which lasts for seven years.
Even if you have identity theft protection and monitoring services, keeping a close watch on your own credit file is a powerful way to remain in charge. You can obtain your free Experian credit report at any time, and it will never impact your credit scores.