Is Identity Theft Insurance Worth It? Exploring The Pros And Cons Of Getting Coverage

Identity Theft Insurance :- Identity theft is one of the fastest-rising crimes in the US, with an estimated 17.6 million Americans becoming victims last year alone. While federal governments have taken steps to combat identity theft, one effective way of safeguarding against its recurrence is proactively taking measures to avoid becoming a target yourself.

Identity theft insurance is an increasingly popular means of protection, but do you really need it? In this article, we’ll look at both its pros and cons so that you can make an informed decision.

What is identity theft insurance?

Identity theft insurance provides financial protection in the event that your identity is stolen. There are two forms of identity theft coverage: Identity repair insurance and identity theft coverage. Identity theft coverage helps insure against the event of theft while repair coverage helps repair any damage done after discovery of theft has taken place. For anyone asking themselves “why I would need identity theft coverage”, here’s why they might benefit: According to the Federal Trade Commission (FTC), an average identity theft costs $2,918 on average per incident.

When your identity is stolen and all steps taken to mitigate its damage are followed, all that will be lost will be money. But without identity theft insurance coverage (an average cost of $6,549) could exceed the losses sustained; identity theft coverage helps bridge that gap.

Identity Theft Insurance :-

1. Types Of Identity Theft Insurance

Types of identity theft insurance
Types of identity theft insurance

Identity theft insurance comes in two varieties, identity theft insurance and identity repair insurance. Identity theft insurance will protect against financial losses caused by identity theft while identity repair helps clean up its aftermath once discovered. Identity theft coverage: This form of coverage protects from financial damages associated with identity theft by covering costs such as freezing your credit and paying for repair services or legal advice associated with cleaning up its aftermath – either way this type of policy should give some financial relief in case it happens to you.

Identity theft insurance is part of a larger identity protection policy. Identity repair insurance: This coverage helps repair any damage done by identity theft by covering expenses associated with credit repair services or legal advice, or missed work time while recovering.

2. Pros Of Identity Theft Insurance

Pros of identity theft insurance
Pros of identity theft insurance

Identity theft insurance provides financial protection from identity theft by covering costs associated with freezing credit, hiring lawyers or cleaning up damage done to your credit report. Furthermore, with an effective plan in place you won’t incur any out-of-pocket expenses should your identity become stolen.

Identity Theft Insurance Offers Coverage Not Covered by Government- The government offers some protection from identity theft, but only covers certain forms of damage done by thieves. Identity theft insurance provides coverage against those not covered by government, such as damage to your credit. Furthermore, long-dormant theft may take years before being discovered – identity theft insurance could help shield against its detrimental effects by offering long-term protection.

3. Cons Of Identity Theft Insurance

 Cons of identity theft insurance
Cons of identity theft insurance

Premiums – One of the main drawbacks to identity theft insurance is its cost, as you’ll likely have to pay an annual or monthly premium depending on factors such as age and coverage type.

Identity Theft Insurance Policies May Not Cover All Damage – Identity theft insurance does not always offer an all-encompassing solution, with some policies only covering certain forms of damages caused by identity theft.

Identity Theft Insurance May Not Cover Full Damage – Even with identity theft insurance in place, damage caused by identity theft could exceed what your policy can cover. If this occurs and if insurance doesn’t fully reimburse for all the associated expenses incurred as a result of theft, any remaining expenses must be met out-of-pocket by you personally.

Identity Theft Insurance Doesn’t Prevent It – While identity theft insurance can help provide some peace of mind if your identity is stolen, it doesn’t prevent future incidents from taking place.

4. Alternatives To Identity Theft Insurance

Alternatives to identity theft insurance
Alternatives to identity theft insurance

Preventive Measures – Your first line of defense against identity theft should be taking preventative steps to thwart it in the first place. Create strong passwords, install antivirus software and be wary about what links you click. If you already have a policy, add one of these policies as add-on coverage:

Credit Monitoring Services – Credit monitoring services enable you to keep an eye on your credit score, helping detect identity theft before it has an opportunity to cause harm. They are an affordable alternative to identity theft insurance policies as they don’t require long-term commitment or premium payments.

Credit Freeze – Freezing your credit report is one of the best ways to protect against identity theft and costs nothing. By restricting creditors access, they won’t be able to open new accounts in your name or use existing accounts to their advantage – something a credit freeze might not always be necessary if new accounts pop up under your name; but each state has different laws regarding this matter so for more information it would be prudent to check with their Department of Financial Institutions directly.

5. How To Choose The Right Identity Theft Insurance

How to choose the right identity theft insurance
How to choose the right identity theft insurance

Finding the ideal identity theft insurance starts by compiling a list of damages caused by identity theft that you want covered by insurance. Once this step has been taken, start comparing policies.

First and foremost, take an inventory of the cost associated with insurance policies against identity theft. Start by asking friends and family who already have this coverage how much their monthly premiums are; or search online for quotes. Secondly, explore all available coverage types; be sure the one chosen covers any damage resulting from identity theft on your list.

Conclusion

Identity theft insurance can be an excellent investment if you can’t afford the costs associated with recovering from identity theft. Just keep in mind that insurance doesn’t protect against identity theft in itself; thus the best way to stay protected from future incidents would be taking steps to avoid becoming victims themselves.

Also read:- 8 Essential Things To Consider Before You Take Auto Insurance