Open your credit card statement and odds are you will find included yet another offer to have a company keep a close eye on your credit, sending you updates and notifications each time your credit is examined or used. For a small monthly fee, they will help you safeguard your credit against fraud. Statistically, many people choose not to use these kinds of services because in truth, they don't offer anything that you can’t already do yourself for free.
But what about Identity Theft insurance? Is there good value in protecting yourself from loss if someone does steal our identity?
According to the FTC, 1 in 20 adults in the US are already victims of identity theft. The FBI released a statistic in 2004 that 1 in 4 PCs will be hacked by cyber-crooks. The general consensus among security and privacy professionals is more along the lines of "when" not "if" these days. Identity theft has affected at least 10 million people a year costing businesses over $50 billion (a cost they no doubt pass back to their customers), and consumers have spent $5 billion to undo the damage of the crimes. So is it worth getting some kind of insurance to help?
I think it is, and here's why.
Getting your identity stolen is a real disaster. It can be as devastating to your personal finances a hurricane can be to your home. Restoring your credit, defending against civil and criminal judgments, and so on can be expensive. According to experts the average cost is around $10,000 and 75 hours to clean up after your identity is stolen.
Insurance companies offering the service often include coverage highlights like these:
- Specialized Customer Service —Identity theft specialists are on call to guide individuals through the process of restoring their identity profiles and credit records.
- An ID Theft Recovery Kit<!--[if !supportLists]--> — A guide, complete with form letters to send to creditors and bureaus, is provided to each identity theft victim.
- <!--[endif]-->Income Protection<!--[if !supportLists]--> — Coverage is provided for lost wages as a result of time off work related to a covered stolen identity event.
- <!--[endif]-->Expense Reimbursement — Expenses related to the recovery of an identity, including defense costs for certain civil suits, re-filing for loans and reimbursement of fees are covered.
Protect your computer from cyber-crooks. The single fastest growing resource of identity thieves is the Internet. Home users and small businesses have become their primary target, since they can’t afford the high level of protection large corporations and financial institutions, and often suffer from a lack of know-how to protect themselves online. Worse still, many online users believe they are properly protected by free, or low cost, software they get online or from a retailer. The fact is that when home users and small businesses incorporate enterprise-grade security on their PCs cyber-thieves move on to easier targets. I recommend INVISUS Direct because they provide a comprehensive suite of protective software, free unlimited support for all your security needs, and they actually include a $25,000 ID Theft insurance policy from AIG as part of their service.
Safeguard your personal information. Except for special occasions when you know your Social Security Card will be needed, keep that card in a safe place at home, in a safe, or safe deposit box. Don’t carry anything with you that has your SSN on it. That will make it very easy for a thief who steals your wallet or purse to assume your identity. Be aware of what you throw away. Shred any trash that has personal information on it. Never give out personal information on the phone or Internet unless you know for sure who are you dealing with, and what will be done with your information.
http://www.vodium.com/goto/ftc/idteft_en.asp
Check your credit report regularly and consider setting up a fraud alert on your credit accounts. You don’t need to be a victim already to file a fraud alert with the bureaus. You can set that up at any time. What that will do it alert any companies looking to open a new credit account that they need to contact you personally before they proceed. This can slow the process a little bit for you when you need to open a new credit account somewhere, but it’s a good trade off to be alerted before an ID thief tries to open an account in your name. It will stop them dead in their tracks. Fraud alerts won’t stop ID thieves from accessing your existing accounts, so you still need to stay on top of your credit report. You can get a free report every year from this website:
http://freecreditreport.com
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