What Is Identity Theft Insurance?

With the proliferation of Internet commerce a unique situation has arisen–people’s identities are being stolen on a regular, ever increasing basis. There is an entire industry dedicated to assuming the identity of someone else for personal gain. As a result, people are naturally frightened they will be taken advantage of, and possibly suffer financial loss. Enter the insurance industry. They have found a demand to fill and have begun to offer identity theft insurance.

What Is Identity Theft Insurance?

Simply put, identity theft insurance is coverage that will protect you in case your identity is stolen and you suffer financial losses. This can range anywhere from a hacker in an overseas country breaking into your savings account to someone looking over your shoulder at a supermarket and memorizing your PIN number to a thief stealing your credit cards. The person who steals your PIN number or credit cards can accomplish the same thing as the computer hacker, but must log onto a computer with Internet service first. In each case, the perpetrator gains access to your bank account.

Identity Thieves Work Quickly

Identity theft isn’t limited to computer hackers, but it is an ever increasing problem. For the hackers the process is impersonal. To them you’re nothing more than a name or a set of numbers. The entire process of transferring money from one bank account to another can be accomplished in much less time than it takes to read these sentences. The Internet seemingly works at the speed of light. Law enforcement can’t keep up.

How You Can Protect Yourself

Not everyone agrees on how to protect yourself from identity theft. Some consider identity theft insurance to be nothing more than a false sense of security. Insurance companies offer a variety of protection plans, and security specialists promote various ways of preventing identity theft. Of course prevention is preferable, but not always possible, no matter how many precautions you take. That’s why identity theft insurance may be a viable option. However, it is important to note that not every policy is created equal. You will have to take time and do research to find the best identity theft insurance.

The Downside

The downside of an identity theft insurance policy is that it doesn’t prevent the theft of your identity, nor does it reimburse you for your financial losses. It does, however, help you repair the damage done to your reputation and credit history by identity thieves. Overcoming identity theft can be time consuming and frustrating. It may require you to contact businesses, organizations, and credit card companies repeatedly before they’re convinced you’re not the one running up huge bills. In the event a crime is committed using your identity, you will have to provide overwhelming evidence that you didn’t commit the crime. This is one case where you’re not presumed innocent. As far as law enforcement is concerned, you committed the crime unless you can prove someone else did it using your identity. At the very least, your reputation can be severely damaged, and your credit rating can take a nosedive. Identity theft insurance won’t help you until after the fact.

The Upside

Any financial help you can receive from identity theft insurance coverage is sure to come in handy. Some policies provide help with attorney’s fees or reimburse you for any time you need to take away from work to straighten out the mess. The insurance policy itself is relatively inexpensive, which is one reason many who are on the fence eventually decide to invest in identity theft insurance. If nothing else, it will provide a little peace of mind.

Guest post from Bailey Harris. Bailey writes for the Home Insurance Blog.