In this article:
Identity theft is widespread. In 2022, the Federal Trade Commission received 1.1 million consumer complaints about identity theft, with credit card fraud making up the biggest category. Yet far more people, an estimated 15.5 million U.S. adults, were victims of identity fraud in 2022, according to Javelin Strategy & Research.
In some cases, identity theft insurance can help a victim recover from identity theft. This type of insurance offers assistance, such as reimbursement of theft-related costs, as you seek to restore your identity and repair credit damage. Insurance companies, credit credit card companies and credit monitoring services are among the providers of identity theft insurance.
Here's what you need to know about how identity theft insurance works, where to get it and how to protect yourself from identity theft.
How Does Identity Theft Insurance Work?
Broadly speaking, identity theft insurance helps you clean up the mess caused by identity theft. Coverage varies by insurer and by state, but identity theft insurance may include:
- Reimbursement of legal fees: For instance, this could include payment of fees to an attorney to defend you in a theft-related lawsuit.
- Reimbursement of lost wages: This money can cover wages you didn't earn because you took time off from work to recover from identity theft.
- Child care, spousal care or elder care: Identity theft insurance might pay for the cost of caring for a child, spouse or elderly relative while you're working to resolve your identity theft case.
- Monitoring of your identity and credit: Identity theft insurance might include services for monitoring your identity and credit for things like new accounts opened in your name.
- Notary fees: If you need to get theft-related documents notarized, such as paperwork for a court case, identity theft insurance might cover the cost.
- Certified mail: Coverage may include expenses for sending theft-related documents by certified mail.
- Phone bills: Any phone calls you make related to your identity theft case might be paid by identity theft insurance.
- Assistance from a consumer fraud specialist: As part of your insurance plan, an expert might be assigned to guide you through the process of recovering from identity theft.
The Massachusetts Division of Insurance emphasizes that identity theft insurance does not cover direct monetary losses associated with identity theft—such as fraudulent charges on a credit card—and cannot protect you from becoming a victim of identity theft.
How to Get Identity Theft Insurance
Property insurance companies, identity theft insurance providers, credit card companies, banks and credit unions are some of the potential sources of identity theft insurance.
Some insurers sell identity theft insurance as an add-on to homeowners, renters or auto insurance policies. In addition, various identity protection companies offer standalone identity theft insurance policies.
Furthermore, some credit card issuers provide identity theft insurance, either at no cost or for a fee. Banks and credit unions might also offer this type of coverage to their customers. Keep in mind that while it isn't identity theft insurance, most credit card companies provide zero liability fraud protection for fraudulent charges, which could be the result of identity theft.
Other providers of identity theft coverage are companies that offer credit monitoring services, such as Experian. The Experian IdentityWorks℠ Premium plan offers up to $1 million in identity theft insurance, as well as dedicated fraud resolution support.
How to Protect Yourself From Identity Theft
You can take a number of steps to protect yourself from identity theft. They include:
- Never share personal information, such as your Social Security number, date of birth or bank account numbers, especially online.
- Regularly review credit card and bank statements to look for suspicious transactions.
- Come up with online account passwords that are at least eight characters long and include a mix of letters, numbers and symbols.
- Use a password manager. A password manager enables you to use a unique password for each online account and easily keep track of all of your passwords.
- Regularly check your credit reports to see if, for instance, any accounts have been opened in your name without your knowledge.
- Watch out for phishing. Fraudsters engage in phishing, usually through legitimate-looking emails or text messages, to steal information or install software in an attempt to steal personal data or login information. In one example of a phishing attack, you might be directed to click on a link that then downloads dangerous software known as malware.
- Install security software on your computer and other electronic devices, and make sure it's always up to date.
- Shred documents, such as credit card bills, that contain personal or financial details.
The Bottom Line
Having your identity stolen can cause a big, expensive headache. While identity theft insurance can't stop identity theft from happening, it can help you recover from it. Insurance companies, identity theft protection providers, credit card companies and credit monitoring services are among the suppliers of identity theft insurance. For basic identity theft protection, sign up today for Experian's free basic protection plan.