|A Rise in Identity Theft Spurs New Type of Insurance|
What Is Identity Theft?
Identity theft occurs when a person uses your personal information, such as Social Security number and date of birth, with the intent to commit fraud or to aid an unlawful activity. Once personal information is obtained, the person may open new credit card accounts in your name, open bank accounts in your name to write bad checks or take out a loan in your name. Federal law provides a $50 liability limit for the fraudulent use of credit cards. Because of this, most identity theft victims never incur a high amount of direct monetary losses. However, restoring credit and correcting the information is a slow and time-consuming process. Identity theft insurance is one way to help consumers cope.
What can you do to prevent Identity Theft?
Taking steps to protect your identity is important. Here are some suggestions:
|Can You Insure Against Identity Theft?|
If you are a victim of identity theft, it can be very costly to reestablish your credit and identity. Several companies are now offering identity theft insurance, which generally costs between $25 and $60 per year. Identity theft insurance cannot protect you from becoming a victim of identity theft and does not cover direct monetary losses incurred as result of identity theft. Instead, identity theft insurance provides coverage for the cost of reclaiming your financial identity, such as the costs of making phone calls, making copies, mailing documents, taking time off from work without pay (lost wages) and hiring an attorney.
Things To Consider
|Before You Buy|
Check to see if your current homeowner insurer includes identity theft insurance as part of your homeowner's insurance. If not, you may be able to add identity theft insurance to your homeowner's policy for a small fee or purchase a stand-alone policy from another insurer, bank or credit card company.
As with any insurance product, make sure you understand what you are purchasing and compare the product's price, coverage and deductibles among multiple insurers.
For More Information on Identity Theft
For ideas and suggestions on how to minimize the risk of identity theft, or what to do if you become a victim, please visit the Federal Trade Commission Website at: www.consumer.gov/topics/identity-theft