Identity Theft Insurance Comes of Age

I have generally recommended against identity theft insurance. I thought it was a rip-off when the insurance products provided you with minimal money to get help with a process that could take years. Why bother? I regularly told readers just to buy a good paper shredder.

Well, the products have changed, the crime itself has changed, and so has my opinion. I recently did a blog on how an American Idol contestant had her identity stolen, and not a single piece of paper was involved. As a result, this crime has moved beyond the capabilities of your trusty paper shredder and into the electronic age.

The new products in identity theft not only provide you with money to help fix what someone else has tampered with, they also monitor your key financial and credit information! These are not "pure" insurance products, but I'm not one to split hairs, especially when the product actually does more of what I want, as well as provide the right insurance coverage.

Here's a sample of the services you can get with these next generation identity theft insurance products:

1. A copy of your current credit report from all of the major credit bureaus. (As the "owner" of the original information, you are entitled to these reports -- free of charge -- but most of us don't ever get them. This kind of insurance product makes sure that you do have a copy, and that you know that your current identity is free of problems.) In many cases, your insurer will make sure that you get the one free report that you are entitled to on an annual basis. This is a primary tool to ensure that your identity is not being abused by someone else.

2. They will monitor your bank accounts for you, and will report any suspicious behaviour to you. This ensures that any attempted hijacking of your identity can be stopped as quickly as possible.

3. They will remove you from pre-approved credit card lists. (These lists are a great resource for criminals because these pre-approved offers arrive in your mail. A quick removal of your letters from your mailbox, and a scam artist may have a gold mine in hand.)

4. Of course, the product will include some level of credit repair if there is any problem. Some companies even provide access to credit repair specialists as part of the coverage.

5. Most identity theft insurance will also protect you from financial losses resulting from the theft of your identity. Be aware that some policies may have a ceiling on the amount they will pay against losses.

Now this is much more service than the "first generation" identity theft polices, which generally only provided a certain (limited) amount of money for you to use to fix the problem yourself. However, how many of us would even know where to start? For that matter, how would you find competant professionals to help you? The latest offerings in identity insurance address these weak points and provide a much more comprehensive product that meets the customer's true need -- which is to get your life back.

These products are not "cheap" in my opinion. After all, identity theft (while on the rise) is still a relatively obscure crime. However, if you live in a middle or upper class neighbourhood that might be an attractive target, this could be a very cost effective purchase for you.

Identity theft insurance hasn't been around long enough for most players in the market to have a long track record. However, I'd do as much research on any company that you are interested in as you can. Contact your local Department of Insurance and find out if the company has a history of complaints. Check out the insurer's rating on A.M. Best. Find out if you can speak to existing customers without an insurance company employee present. Read all the fine print in any policy before you sign on the dotted line.

In my opinion, if you have any concerns that you could be a target for identity theft -- get one of these policies and sleep better at night.

Monique L. Attinger
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