What is identity theft insurance, and is it worth buying?

Key Takeaway
You are aware of how identity theft is a major issue in the modern world. Insurance against identity theft exists and acts as a financial superhero. It won't cost a fortune and will help you if your personal information is ever stolen and misused. With the help of a reliable insurance, Homebody, one of the good men in this game, can take care of you. It's entirely worth it.

One of the problems facing Americans today is ID theft. If you have been a victim and lost everything, you are not alone, and it is not necessarily your fault. Even with preparation and careful monitoring, it’s impossible to prevent your personal information from being compromised. But if you have the right insurance, you can get compensated for any financial losses you might experience.

This comprehensive guide by Homebody will enlighten you about ID theft insurance.‍ Grab a cup of coffee, and let’s have fun.

Identity Theft Explained

Identity theft is the stealing of your personal or financial information without your consent. In most cases, identity thieves try to use stolen information to steal money, to take out loans and lines of credit, or for other illegitimate purposes. You might relate to the examples below, but don't blame yourself.

  • A criminal stealing your Social Security number and bank information to take money from your bank account.
  • An identity thief posing as you to open up a line of credit or loan, then leaving you with the debt after taking the money.
  • An identity thief posing as you to acquire medical services, prescription medications, and more.

Any type of identity theft can be disastrous and very stressful. Even worse, it is more common than ever.

You must know how to defend yourself and your bank account from identity theft attacks.

What Are Identity Theft Protection Services?

To understand identity theft insurance, you must first know about identity theft protection services.

Identity theft protection services are third-party services designed to help with monitoring your crucial information, recovering your personal information, and reimbursing you in the event of an attack. You can have more or less protection from identity thieves depending on the identity theft protection service you work with. Most ID theft protection services are packaged with antivirus providers. 

As an example, you can get antivirus from Norton, then also get ID theft protection from a subsidiary company or service under the Norton umbrella.

Most ID theft protection services do things like:

  • Check the dark web (dark web monitoring) and other Internet databases for your personal information, which could indicate that it is compromised. This also includes credit monitoring services, which may prevent you from becoming a victim of identity theft.
  • Help you draft letters and reports to the FTC, credit bureaus, banks, and other important information if you need to dispute a false charge, loan, or line of credit.
  • Assist with recovering your personal information from databases, data brokers, and other online sites to restore your identity.
  • Provide you with advice so you can more effectively protect your identity from future attacks.
  • Provide you with insurance so you can be reimbursed for certain financial damages.

What is Identity Theft Insurance?

There is nothing to worry about if you do not know about ID theft insurance. One of the aims of this comprehensive article is to guide and inform you about ID theft insurance.

Identity theft insurance is an insurance policy type that specifically provides financial reimbursement to victims of identity theft. Like all insurance policies, you pay a monthly premium in exchange for a certain amount of insurance coverage in the event of an identity theft attack. Buying identity theft insurance may help you recover from identity fraud.

For example, say that your information is compromised by a credit bureau data breach. You could be compensated for up to $10,000 or some other amount If you have ID theft insurance. Of course, you have to pay up to your out-of-pocket deductible before you’ll be reimbursed for those losses.

In many cases, identity theft insurance premium costs are bundled with the monthly fees you pay for identity theft protection services. However, you can also pay for ID theft insurance separately, in which case your premium will only pay for your insurance coverage. ID theft insurance is usually offered by credit card companies, insurance providers, and even credit bureaus or antivirus providers. You can also sometimes find ID theft insurance offered as a subsidiary policy with homeowners insurance. Regardless, ID theft insurance is something that you should consider heavily.

Photo by Alexander Grey on Unsplash

What Does Identity Theft Insurance Cover?

Of course, ID theft insurance policies can cover a wide variety of different things. 

The higher your premium is, the more things your ID theft protection will usually protect against and the more coverage you’ll have if you are victimized by ID theft.

Generally, ID theft insurance covers:

  • The fees for identity restoration specialists, case managers, and other individuals who may help you through identity theft recovery.
  • Legal fees and charges for court hearings, civil judgments, attorneys, etc.
  • Lost wages may be associated with identity theft (for example, if your ID theft causes you to lose your job for some time).
  • Costs of replacing important documents, like your driver’s license, Social Security card, or other ID.
  • The costs needed to place a fraud alert on your credit reports from the big three credit bureaus.
  • Any additional fees that your bank or lender might charge because of fraudulent financial activity.

Think of ID theft insurance as a contingency plan that helps you manage the financial fallout of an ID theft attack.

You won’t have to worry about breaking the bank if your personal information is stolen or compromised if you have an ID theft insurance policy, especially from reliable a company like Homebody.

Many ID theft insurance policies cover you from anywhere between $10,000 and $15,000, though some policies can cover you for up to $1 million in expenses.

‍This offers peace of mind against ID theft.

What Does Identity Theft Insurance Not Cover?

I know you want to enjoy all the benefits. But you need to know what identity theft insurance does not cover.

Like other insurance policies, ID theft insurance also doesn’t cover some things: most importantly, ID theft insurance does not cover any stolen money or direct financial losses that may occur from the unauthorized use of your credit accounts or loans.

Let’s go a little bit deeper here. 

Imagine your identity is compromised, and an ID thief enters your bank account. If that happens, and the ID thief steals $500, your insurance policy will not reimburse you for that $500.

Don’t be surprised yet. Follow on.

Similarly, if an ID thief gets access to your credit cards and makes purchases using those stolen credit cards, your ID theft insurance policy won't reimburse you to pay down the credit card debt. 

You'll have to take that up with your credit card provider.

Fortunately, most credit card providers will waive any charges or fees your cards incur if you can prove that your identity was stolen. 

Furthermore, the Fair Credit Billing Act prevents you from paying for losses from the unauthorized use of a credit card over $50.

ID theft insurance usually only reimburses you for any costs associated with ID theft reporting and recovery processes.

If you want additional protection, you should opt for a more comprehensive identity theft protection service package or get extra insurance policies. 

Some policies offer additional coverage for different costs and charges associated with ID theft.

Should You Buy Identity Theft Insurance?

Buying theft insurance largely depends on you, but it is strongly advised to get it because the benefits are something you don’t want to miss.

Generally, ID theft insurance is recommended for anyone who wants more peace of mind.

With millions of ID theft cases every year, it’s a no-brainer to purchase identity theft insurance for you and your family, particularly if you spend a lot of time online or have multiple accounts that can potentially act as vulnerabilities for identity thieves.

You can also ask yourself if you are likely to be a target for identity-related fraud. 

You are more likely to be victims of identity theft if:

  • You don't take proper precautions, like checking your credit reports annually and keeping track of your wallets
  • You work remotely, which means that more of your personal information is likely to be online
  • You often conduct business online, such as conducting business meetings, sending emails, etc.
  • You have very valuable virtual assets

If you qualify in any of these categories, ID theft insurance could be a worthwhile purchase.

‍And Homebody is one of the best places to get this and enjoy peace of mind.

Tips to Prevent ID Theft

The best way to avoid having to pay for ID theft insurance is to prevent identity theft in the first place. 

Luckily, there are lots of ways in which you can minimize your likelihood of ID theft attacks.

Go Paperless

For example, ask your bank or credit union to opt you into paperless billing. Paperless billing is better for the environment, but, more importantly, it also prevents your bank statements and other critical documents from showing up in your mailbox. 

A motivated thief can break into your mailbox and get access to your personal info this way. And you know what that means.

You remove one more potential way a bad actor can compromise your information with paperless billing.

Don’t Put Personal Info Online

You should also avoid putting any personal information online. 

When it’s not absolutely necessary, don’t mention your birthday, address, or special your Social Security number. Never do this online!

A knowledgeable identity thief can use basic things like your birthday or your hometown to guess the answers to your security questions for your accounts, giving them access to your bank records and more.

Use a VPN

A virtual private network is a worthwhile tool if you ever use a public Wi-Fi network. It is important, just like your daily meal.

Use this to prevent snooping on your computer and make it impossible for hackers to access your files while working.

Monitor Your Credit Reports

Take advantage of the free annual credit report from the three credit bureaus. 

You can read other comprehensive articles from Homebody like this here.

These free reports let you monitor your credit score and records of credit charges and lines of credit under your name. 

If you notice anything suspicious, you can file a dispute with the credit bureaus and even freeze your credit accounts to prevent identity thieves from being able to use them.

These are just a few ways to protect yourself and your family against identity theft.

How Much Does Identity Theft Insurance Cost?

ID theft insurance is not as expensive as you think, especially if you partner with a reliable company.

Most insurance policies cost anywhere between $20 and $60 per year, especially if you purchase them with ID theft protection services. 

Your insurance policy might cost you less if you purchase it with an ID theft protection service, in fact.

Remember, the higher your premium, the less of an out-of-pocket deductible you may need to pay before you are reimbursed for any associated expenses. 

The reverse is true if your premium is very low.

And you can get a quote from Homebody for ID theft insurance now.

Bottom line

Identity theft insurance could be a wonderful investment for yourself, your family, and your future finances. 

The right identity theft insurance policy can provide peace of mind and ensure that a single attack doesn’t cause long-lasting ramifications. 

Consider signing up for identity theft protection services with insurance policies today.

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