AARP: Check Out Identity Theft Insurance Carefully to Determine if it is a Good Investment

The Federal Trade Commission estimates that more than 9 million individuals are victims of identity theft each year.

The typical case involves a stolen credit card, and not the much more serious crime of trying to steal someone's identity by opening accounts and getting fake identification in the victim's name.  Some people are under the impression that if they purchase identity theft insurance that is sold by many homeowners insurance companies they will be protected from identity theft under any circumstances.

Identity theft insurance is not much of an investment, with they typical policy costing anywhere from $25 to $100 per year, as a rider to a consumer's homeowners insurance policy.  The cost, however, is not the problem.  The problem lies in the actual coverage the policy offers.

Identity theft insurance covers the expenses you rack up in dealing with the problem if it happens to you.  According to the Insurance Information Institute, which lists about a dozen major companies offering identity theft coverage, the typical policy provides $15,000 to $25,000 worth of coverage for expenses such as phone bills, lost wages, notary and certified mailing costs and sometimes attorney fees with the prior consent of the insurer.

While all of that sounds important, the phone expenses directly related to fixing credit problems are likely to be negligible.  The rest of the costs associated with cleaning up an identity theft situation are real and can be considerable.

Some people feel that the time and aggravation they suffer in dealing with identity theft is much worse than what they lose financially, so they want the insurance for the assistance it offers more so than for the monetary protection.  To determine that value in a policy, get specifics about what the policy covers and specifically how it will work in the event you need it.  Some counseling services write and send letters on your behalf, while others guide you in who to contact and what to send but leave the heavy lifting to you.

Don't be fooled by the low price.  Any insurance rider that is unnecessary and unlikely to be used is costly, no matter what the price.

You can learn more about identity theft and other scams at AARP's Web site at http://www.aarp.org/money/wise_consumer/scams/.

Comments

[Ellen]

Great work.

[Antarcesmeare]

People should read this