Why an Identity Theft Insurance Policy should be Added to your Homeowners Policy

Every year more than 8 million Americans will be victims of identity fraud, according to the 2007 Identity Fraud Survey Report. Those charges will cost the victim an average of over $5500. That is a startling statistic considering the majority of Americans do very little to protect their identity from these predators. But how do these thieves get access to our personal information so easily? Most of the time, credit card information is obtained by online “phishing” scams ( using email inquiries from bogus financial institutions to obtain personal information) or in some cases, more conventional “dumpster diving” methods. While there are several ways you can protect yourself from becoming a victim of identity theft, one of the easiest ways is to obtain an Identity Theft Insurance Policy.

Many insurance companies have an existing identity theft clause in existing homeowners insurance policies. This protection comes at no additional cost to the consumer, and usually provides a fraud specialist to help the victim restore and protect their identity. Other insurance companies offer identity theft riders that can be added to existing homeowners policies for a small manageable fee. These riders or endorsement policies cover any expenses accrued during the process of restoring your credit. These coverages include, but are not limited to lost wages, attorney fees ( in some applicable situations), phone bills, late fees etc. Allstate offers its’ customers a chance to customize their homeowners insurance policy by adding Identity Restoration coverage. This coverage includes up to $25,000 for covered expenses and that alone may help you sleep better at night.

But what don’t these policies cover? Unfortunately some of these policies don’t cover any money stolen by family members or friends. If your brother charges $200 on your credit card for items you didn’t authorize, you may be on your own. What many of these policies also do not cover are the actual monetary fraudulent charges. Since the majority of these identity theft situations involve credit cards, most insurance companies fully expect the credit card company to erase and resolve these expenses on their own.

While identity theft insurance policies will help save you a bundle if you ever fall victim to identity theft, you should always choose your policy carefully. Make sure that your existing homeowner’s policy doesn’t already cover you and check your credit cards to see what coverage they offer you in case you have your identity stolen. By knowing what coverage you already have, you will be better able to purchase an endorsement policy that is right for you.

In addition to adding an identity theft rider to your homeowners insurance, there are several things you can do to lower your chances of having your identity stolen.

1. Cancel all paper bills and statements and do your checking and bill paying online

2. Monitor all credit card balances weekly so you will know the moment a fraudulent charge appears

3. Review your credit report annually.

4. Be weary of online scams that ask for credit information and do all of your online shopping from reputable sites.

5. Cancel all unused credit card accounts that have been inactive for a period of time.

Protecting yourself from identity theft can cost you less than $100/year. If you pay attention to your credit, monitor your charges, and obtain adequate insurance, chances are you will never have to deal with it. But if you someone should steal your identity, having an identity theft insurance policy will not only save you money, but help you restore your credit quickly and easily.