Since January 2014, estimates are that over two million of our electronic records have been stolen or compromised in some way. A nonprofit research group called Privacy Rights Clearinghouse says that incidents of personal electronic data theft have grown to an astounding 864 Million cases since 2005. With hackers and scammers getting more and more savvy every day, it is no wonder we all want to know how to protect our personal identity and lines of credit.
Enter big insurance. Today, insurers have found another way to dip into our pockets, this time with a new type of policy called Identity Theft Insurance. But is it really worth its proverbial weight in gold?
The Cost Of Your Peace Of Mind
The National Association of Insurance Commissioners have reported that most identity theft insurance comes in the form of a rider on existing automobile and homeowners policies. They run between $25 and $60 per year, but can be even higher than this if purchased independently.
Unnecessary Coverage
These policies purely cover the costs you will have in trying to recover your money and good name. It does not consider any losses due to theft or fraud to be insurable. This means that if your bank account is drained or your credit card is maxed out, ID theft insurance does not cover these expenses.
These policies will only reimburse you for any real cost of postage, phone calls, and other incidentals. If you have to take a day off from work and can prove it was to handle issues related to identity theft, the policy should pay your lost wages. The rub is that most of these expenses are marginal compared to what you have actually lost due to the theft. In most cases, banks and other financial institutions will not charge you to freeze your accounts. Even the big three credit bureaus will provide you with free copies of your credit report. So, there is nothing to reimburse to you.
Some policies even boast that they can give you a case manager and do the paperwork for you, should you become a victim. But according to the United States Bureau of Justice Statistics, over 85% of all ID fraud cases were perpetrated on someone’s existing bank account or credit card. In almost all of these cases, the victim could handle the matter with one or two phone calls and have it resolved within one day. Again, there is nothing reimbursable here.
To Buy Or Not To Buy
ID theft insurance almost seems to be a way for these companies to cash in on your fear. University of Pennsylvania professor Tom Baker agrees that you should not be buying peace of mind. True peace comes when you have diligently protected yourself and you know this.
Plus, with increased awareness about the potential for ID theft, many lenders now offer credit alerts for free. Anytime you make a large purchase or increase your line of credit, they will contact you and verify it is really you doing that. Free services like this are much better than anything you need to pay for, especially when you live on a budget. It almost sounds like the cost for this insurance is more than any potential benefits it may pay out in the future.
Long story short, it is probably not a good idea to invest in identity theft insurance. Chances are you will not incur expenses to remedy the problem that are so large they would justify the cost. Just protect yourself and your accounts, and things should be fine.
Not to mention the premiums could be very costly. So if you look closely, you’re really better off with a protection program like Lifelock than an insurance policy on identity theft.
I didn’t even know there was such thing as identity theft insurance.I can only imagine how much that’s going to cost. I don’t need another insurance to add to the bills. Lifelock is a lot better than insurance. Their one million guarantee beats any kind of identity theft insurance.
The thought of someone using my name, birth date, and address is really scary. So I’d rather get some kind of identity theft protection like Lifelock.
Identity theft is a scary, scary thing! We can’t stop it now because technology has made it easier for the thieves to get hold of our information. We can only two things: take extra precaution and get monitored by a security software like Lifelock! The reality is, no matter how much we try to be careful, the thieves will always be ten steps ahead of us!
In the field of medicine, doctors say that prevention is better than cure. I guess it’s the same with identity theft. I would rather get protection than insurance.