Identity Theft Insurance Links
One feature of many credit monitoring services is an "identity theft insurance" policy. They typically have impressive coverage limits- $10,000, $25,000, even a million dollars.
Look a little closer, though, and you realize most policies don't reimburse your for money taken from your accounts or debt run up in your name. Instead, they cover expenses your incur clearing your name if you become a victim of identity theft. This includes expenses such as lost wages, long distance calls and, with "prior approval," attorney's fees.
Most consumer groups, notably Consumer Reports, don't recommend buying these policies. The state of New York generally outlaws these types of policies.
Below are some links with more information on identity theft insurance.
Identity Theft Insurance
In their "Stupid Investment of the Week" feature, Chuck Jaffe points out that identity theft insurance won't help in a typical identity theft case where a credit card is used fraudulently. The article goes on to describe a key point about these policies that the insurance companies hope you'll overlook: They don't cover any identity theft related monetary losses. The policies only recover some of the expenses you may incur in clearing your name.
BusinessWeek looks at identity theft insurance policies. It notes Consumer Reports' stance that it "doesn't recommend buying ID-theft insurance." Another interesting statistic from the article is that "almost a third of (identity theft) victims don't lose any money at all."
This is the policy offered on Equifax credit monitoring products with identity theft insurance. Note that it is only $25 a year. Similar policies are offered by other insurance agencies.
Originally Published: Saturday, March 10, 2007, 4:00 PM PT
Last Updated: Saturday, July 16, 2011, 7:03 PM PT
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