Do You Need Identity Theft Insurance?

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Do You Need Identity Theft InsuranceThere is a breed of insurance that many may be unfamiliar with and it’s called “Identity Theft Insurance”. Basically, identity theft insurance is exactly what it sounds like. Identity theft insurance covers costs associated with dealing with your identity theft problem if your identity is ever stolen. The policies typically cover wages for time lost from work while you straighten out the problem, phone bills, certified mail costs, notary fees, and on occasion attorney fees if they have been pre-approved by the insurer.

The question is whether or not all this is really necessary. Most experts say that it is not, and that it is just another way for insurance companies to take your money. Let’s look at why identity theft insurance is probably not necessary.

There is no denying that identity theft is a problem with the number of cases being reported skyrocketing to new highs each year. The vast majority of identity theft cases involve something simple like a stolen credit card rather than a full blown case where someone opens accounts and gets fake identification in your name.

Identity theft insurance will not help protect you from becoming a victim of identity theft. It is much the same as how carrying flood insurance on your home will not stop a flood.

Identity theft insurance covers the expenses involved with dealing with the aftermath of the theft and with getting your life back on track. Typical coverage includes lost wages, phone bills, notary fees, the cost of mailing certified mail and attorney fees, but only with upfront approval from the insurance company.

Taking a closer look at that list, you will see that phone bills are listed, which is really rather meaningless. Just about anyone you will have to talk to when working to restore your identity will have a toll free line, most likely you are not going to be racking up any phone bills. Even if you do have to call someone who does not have a toll free line, odds are that you have access to a cell phone or some sort of freedom calling plan where you do not have to pay extra for long distance calls. If you do incur any expenses at all from using your phone, it is likely to be a very negligible amount.

Besides the phone coverage, the rest of the costs that are listed are definitely very real expenses that could be associated with a case of identity theft. These expenses can be considerable depending upon how involved the identity theft w. In fact, in very bad cases of identity theft some people have had to miss days or even weeks of work while they attempt to recover their identity and put things right.

The problem is that not all identity theft insurance coverage is the same. Many policies don’t cover lost wages at all, and others only provide only a minimal payment for time lost at work.

Attorney fees must first be approved by the insurance company, and they can be difficult to collect even if you do get approved for them. Many people have complained that identity theft insurance doesn’t help, but just adds one more hassle to an already difficult and time consuming situation.

Ultimately the decision of whether or not you need identity theft insurance lies with you. You need to decide if the amount of coverage and type of coverage is worth the cost of the insurance. The insurance coverage is inexpensive ranging in prices from about $25-100/year, so if having the insurance gives you peace of mind it may be a justifiable expense. On the other hand, most experts agree that it is not a necessity and that most people can get along fine without it.

The best way to avoid any of the cost or headache that go along with identity theft is to take an active roll in protecting your identity. Monitor your credit reports, shred documents with account numbers or other sensitive information, keep an eye on all your bank and credit card accounts, and just generally be aware of your finances at all times.





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