According to the Federal Trade Commission, as many as 9 million Americans become victims of identity theft each year. Identity theft occurs when someone obtains personally identifying information, such as your name, credit card number, birth date, Social Security number, home address and bank account numbers, and then illegitimately uses this information. This unauthorized use of your personal information can result in great financial loss as the thief amasses credit card debt and tarnishes your credit rating.
Repairing the damage from identity theft can be a daunting—and financially taxing—task. After losing money to identity theft, you don’t want to spend more on the various fees and charges that accompany re-establishing your name and credit. Some employers offer identity theft insurance as a voluntary benefit that can help protect you in case you become a victim of identity theft.
What Is Identity Theft Insurance?
Identity theft insurance is designed to relieve you of the financial burden of repairing damages after your identity has been stolen. This type of insurance does not reimburse loss from theft such as stolen credit card numbers or forged bank checks, but rather prevents further loss once you have already become a victim of identity theft. Also, aside from some plans which may provide free credit monitoring, identity theft insurance does not work to prevent identity theft. Instead, identity theft coverage helps with expenses as you navigate the identity recovery process, which is useful whether or not you actually lost money to an identity thief.
What Does Identity Theft Insurance Cover?
Identity theft insurance assists you with the potentially costly and complicated process of recovering from identity theft, and most plans will cover basic expenses incurred during your identity recovery. Eligible expenses may include the following:
- Postage and certified mailing costs
- Phone bills
- Photocopying charges
- Notary and filing fees
- Legal fees and attorney fees
- Fees for reapplying for loans, grants or other credit lines that were denied due to identity theft
- Lost wages due to time away from work to meet with police, confer with attorneys or engage in other recovery-related activities
- Cost of obtaining credit bureau reports
In addition, the insurance may cover fees for a fraud specialist who can support and guide you through the recovery process, and some plans may provide their own experts to assist you.
How Does Identity Theft Insurance Work?
As a voluntary benefit offered to your employees, premiums for identity theft insurance will likely be paid through a payroll deferral. Because the insurance is offered through you the employer, employees are likely getting a group discount on the premium.
After making a claim, the insurance company will reimburse the insured for expenses that are specified in the plan. For some plans, there may be a deductible, which is the amount you would have to pay before the insurance would start paying anything.
In addition, the coverage amount is usually limited between $10,000 and $1 million. Your insurance may have a limit for each occurrence, a limit per policy period, or both.
Having identity theft insurance can contribute to your peace of mind and give you necessary assistance should you ever become a victim of identity theft.
Dana Rostro is the Director of Employee Benefits Sales and Operations at Texas Associates Insurors. Dana is ACA certified and has helped clients develop the best strategies for their operations within the new healthcare legislation.