Do You Need Identity Theft Insurance And What Is It Anyway
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Do You Need Identity Theft Insurance? And What Is It Anyway?
Summary:
Identity theft is a serious concern, leading many to consider identity theft insurance for protection. But what exactly is it, and do you really need it? Let's explore what identity theft insurance covers, its costs, and whether it's worth considering.Understanding Identity Theft Insurance:
Identity theft insurance varies in terms of coverage, deductibles, and costs, much like other insurance types. Typically, it helps cover lost wages due to time off work spent resolving identity theft issues, usually capped at around $2,000. The Privacy Rights Clearinghouse notes that victims spend about 22 workdays on average recovering from identity theft.
Additionally, identity theft insurance may cover:
- Attorney fees
- Notarization of documents
- Mailing and postage costs
- Supplies and copying expenses
- Phone bill charges incurred while restoring your financial reputation
Is It Worth It?
Some critics believe that identity theft insurance isn't worth the investment, as it doesn't cover stolen money or losses if the thief is a family member. The National Association of Insurance Commissioners warns that it can't prevent identity theft or cover direct monetary losses. Some argue it might even create a false sense of security, making consumers less cautious with their personal information.
Costs and Options:
The cost of identity theft insurance varies based on the coverage and how you obtain it, ranging from free to about $200 per year. Here are three common ways to acquire it:
1. As part of your homeowners or renters insurance
2. Through your credit card company, bank, or lender
3. As a standalone policy
Steps to Obtain Coverage:
Start by contacting your banks and insurance providers to understand your existing coverage and additional options. You might need to add identity theft protection as a rider to your current policy, similar to flood or earthquake insurance.
Some credit lenders, like American Express and certain MasterCard partners, offer identity theft insurance to cardholders, often free or for a nominal fee. Ensure that the coverage spans all your credit accounts, not just the associated card.
Alternatively, you can purchase a standalone policy from reputable insurers like Nationwide or State Farm. Be wary of lesser-known providers to avoid scams aimed at stealing your personal information. If coverage is billed monthly, calculate the annual cost and keep your policy up to date.
Deductible Considerations:
Deductibles usually range from $100 to $250, but can be as high as $1,000. The Federal Trade Commission estimates that recovery costs typically amount to less than $1,500. It's crucial to weigh the premiums and deductibles against potential benefits to ensure good value and protection for you and your family.
Protecting Yourself:
While insurance can offer support during recovery, it can't fully protect you from identity theft. Follow basic precautions:
- Safeguard your personal and credit information
- Avoid sharing sensitive info
- Shred unnecessary documents
By understanding your options for identity theft insurance, you can make informed decisions about the coverage that’s right for you, potentially easing the financial burden of dealing with identity theft.
You can find the original non-AI version of this article here: Do You Need Identity Theft Insurance And What Is It Anyway .
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