Does Insurance Cover Identity Theft?

What Types of Insurance Cover Identity Theft?

You may have the option of adding identity theft insurance to your homeowners, renters, condo or manufactured home insurance policy. Some insurance companies may offer it as an add-on for auto or RV insurance as well. And a few companies include identity theft insurance on certain policies automatically—but that's not as common.

Instead of adding the coverage to an existing policy, you can also purchase identity theft insurance as a separate policy. Or, you could sign up for certain non-insurance programs, such as a credit and identity monitoring service or antivirus and identity protection service, that includes identity theft insurance as a benefit.

What Is Identity Theft Insurance?

Identity theft insurance policies can help cover the costs associated with recovering from identity theft. The specifics will depend on the policy, but could include:

• Legal fees
• Administrative fees
• Lost wages
• Required travel expenses
• Elder, spousal and child care costs
• Expenses for replacing stolen identification

Additionally, some identity theft insurance policies include more comprehensive identity monitoring and restoration services.

For example, if you have an Experian Premium membership, you'll receive lost wallet assistance and access to U.S.-based fraud resolution specialists who can help manage your case. Members also get dark web monitoring, identity theft monitoring and credit report monitoring.

The resulting alerts can help warn you of potential or attempted identity theft. Being able to react quickly to shut down accounts that fraudsters are trying to use can help limit the damage and make recovering easier and faster.

How to Protect Yourself From Identity Theft

Just as an auto insurance policy can't keep you from getting in a wreck, identity theft insurance can't prevent identity theft from happening. Even the best identity theft protection services primarily react to events, though services that monitor your accounts and provide alerts can help you react quickly to suspicious activity.

If you want to avoid identity theft to the greatest extent possible, there are some important steps you can take to protect yourself and your personal information:

• Don't share personal information online.
• Use strong passwords, don't reuse passwords and regularly change your passwords—using a password manager can make this easier.
• Set up multifactor authentication for your online accounts.
• Avoid logging in to accounts while connected to public Wi-Fi hotspots.
• Never share personal information with someone who reaches out to you by phone, email, text or on social media.
• Be suspicious of any links sent to you by email or text because clicking on the link may install malware on your device.
• Shred documents that have personal information before throwing them away.

While your personal information could still be leaked during a data breach, taking proactive steps to keep your identity and online accounts private can help limit your risk.

Is Identity Theft Protection Worth Buying?

If you're worried about the costs and time associated with recovering from identity theft, an identity theft insurance policy or protection plan could be a worthwhile investment. But before buying identity theft coverage, review the different policies' costs and coverage.

For example, an add-on to one of your existing insurance policies might only reimburse up to $15,000 or $25,000 in related expenses. An Experian identity theft protection plan can include up to $1 million in coverage. Also, look into what types of additional monitoring and benefits come with the policy and how these can help you protect and restore your identity.