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Is ID theft insurance Indeed Useful?

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identity theft insuranceToday everyone is under the threat of identity theft more than their wallets getting stolen. Based on this fear spread among commoners, identity theft insurance providers are trying to popularize their products; but the question is that, are these insurance products worth? People often get tempted to buy identity theft insurance, because they think that they will get all their stolen money back because of the insurance. How far is this true? Let’s see.

Services Provided by an Identity Theft Insurance Policy

Experts in identity theft and identity theft insurance warn buyers to find out first what services are being provided by the insurance provider. When you buy a home insurance and your house gets damaged due to fire or a natural calamity, the insurance policy covers your repairing costs; similarly, when you buy car insurance, and your car meets with an accident, the policy covers the repairing costs and other expenses. So, anyone can easily get an impression that if they buy identity theft insurance and their identity is stolen, they may be covered for the losses. However, the truth may be different!

other insurance policies

Your ID theft insurance provider is not responsible to replenish your drained bank account; it’s the liability of your bank. You may also be misled by the advertisements of the insurance providers about some variants of their products as protection service or credit monitoring; but remember that these variants do not actually provide the coverage you are looking for.

According to the reports of a nonprofit organization, Privacy Rights Clearinghouse, that maintains an online tally, over 2 million electronic documentations have been infringed last year, and the number of such incidences since 2005 is around 864 million. And right from government offices to big-box traders, everyone is prone to this problem.

widespread Identity Theft

As per experts, ID theft insurance may be way insufficient for buyers looking for protection. The National Association of Insurance Commissioners report that insurance, usually tacked on home, travel and car policies, is worth from $25 to $60 a year. This figure further increases if you buy it separately.

ID theft insurance policies may provide coverage for expenses consumers might accrue while refurbishing their credit record, such as cost of phone calls, postage, legal bills and lost wages because you need to take leave from work. However, chances of getting the out-of-pockets expenses are very few. Among the 12.6 million sufferers of ID theft in 2012, 80% didn’t get anything for their out-of-pocket expenses, according to a survey.

Is a Manager Helpful?: Some ID theft insurance policies offer a manager to help in cleaning the mess occurred due to the theft. However, in most cases the process includes just a single call to the consumer’s bank. 85% sufferers of ID theft in 2012 underwent incidences of abuse of their bank account or credit card, and it took not more than a day for half of them to resolve the mess, as per the Bureau of Justice Statistics.

protecting your identity

Experts say that purchasing an ID theft insurance policy is like buying the services of a wedding planner. You pay a wedding planner to call your wedding vendors and in case of a manager provided by the ID theft insurance provider, there is a call to make to your bank to block your card, which you can even do yourself.

You need not be amazed by ID theft insurance; instead, you should keenly look into how the policy works and what it can do for you, advises the Consumer Federation of America. You should think, whether you are in search of someone, for example, who will do everything for you in a problematic state, or if you are confident enough that upon getting proper advice, you can do it yourself.

It is also advisable to check your homeowner’s insurance policy because it may already include ID theft insurance. So, you can take its advantage for the cost you have already paid.

home insurance can contain ID theft insurance

Protections Available for Free

  • Credit experts suggest consumers to set up alerts with their credit card companies and banks to receive text messages or emails for transactions.
  • You should check your online statements every day.
  • You should also review your credit reports from all the three credit bureaus, Experian, Equifax and TransUnion, at least once a year.
  • You can set up a “security freeze” on your account with the credit bureaus which is available for a small fee (normally less than $10). This can discourage a fraudster from starting a new series of credits on your name.
  • Free fraud alerts are available too, which require your business to take additional steps to confirm your identity before increasing a credit limit or starting new accounts.

More Free Resources

More free resources are also available for your ID protection.

A San Diego-based nonprofit organization, Identity Theft Resource Center, provides a free hotline for ID theft victims.

As such, credit card companies and banks keep an eye already on accounts for scams; in that case, paying for one more monitoring service like ID theft insurance which doesn’t promise security, doesn’t make sense.

What Insurers have to Say

Insurance providers have something different to say. According to them their products are useful to buyers. ID theft insurance of Nationwide which comes for a $45 rider provides cover up to $25,000 against the recovery costs from ID theft. Experts available on their hotlines guide victims through steps to rectify their records. According to the company, the resolution expert is indeed helpful and gives thorough instructions to victims.

Identity Guard

Identity Guard provides credit monitoring and setting of alerts. Among their services, there is scanning of public records and black market for your information and they also provide software which encrypts your keystrokes.

Read Identity Guard insurance review on NoIdentityTheft.com to know about their various packages and plans that are highly comprehensive. They have a low-cost plan too for those who don’t require credit monitoring and reports. And they have plans for kids too which include recovery help in case of attack.

Indentity Guard

Identity Guard provide full assistance to their members who become victims of identity theft, with highly trained assistants who make your recovery process as easy and comfortable as possible.

All in all, a service like that of Identity Guard is anytime more preferable than buying identity theft insurance.

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