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Identify theft is a very real problem in today’s world. But purchasing identity theft insurance can actually make you more of a target. But before running out to purchase an identity theft policy, it’s important to take a closer look at the fine print of identity theft insurance. The truth is, benefits and coverage of identity theft “coverage” are very limited and might not be worth the money, even if it’s a small yearly fee.

Protect Yourself From Identity TheftIdentity theft is the fastest growing consumer crime in the United States. Typically, identity theft affects between 4 and 9 million individuals and most involve a stolen credit card number, not the extreme cases of stolen SS#’s, opening accounts, criminal records, fake ID’s, etc. Despite the losses caused by identify theft, an insurance policy cannot protect you from becoming a victim and does not cover direct monetary losses incurred as a result of identity theft. According to the National Association of Insurance Commissioners, identity theft coverage only covers some of the expenses you will incur to deal with the problem, such as the costs of making phone calls and copies, mailing documents and possibly legal bills. Keep in mind, most identity theft coverage comes with a deductible typically around $100 to $250.  

It is important to realize there are things you can do on your own to receive a degree of ID theft protection for free. Most credit card companies and banks will make theft assistance available to all customers at no charge and will call you if they suspect suspicious activity. Credit card companies, banks and stock brokers usually cover direct losses from ID theft. The primary danger of identity theft is devastation of your credit rating and there is no insurance against that.  

Many of the identity theft protection plans are simply monitoring your credit reports, offering credit freezes (which can be more inconvenient than protective) and some policies pay expenses such as lost wages and minimal legal fees. It is important to keep in mind that identity theft insurance doesn't reimburse you for money that is stolen from you or clean up a criminal record acquired in your name.

Chances are even if your plan claims to cover the costs associated with resolving an identity theft case, the burden of dealing with creditors will still fall on you because most creditors won't deal with anybody else.

In addition, identity theft is usually committed by someone we know, often family members, but identity theft insurance often doesn't pay if the crime is committed by a family member. Fifty percent of the cases reported to the FTC in which the victim was aware of the source, the perpetrator was a family member. So, you have no assistance if your teenager or spouse runs up charges in your name, which is what is statistically most likely to happen.

You might want to check your homeowners insurance policy as well, it may already cover you for identity theft protection. There's no question that identity theft is a very real threat, but the best insurance is prevention.  

You can take action yourself by paying attention to your credit report and requesting them from one of the bureaus quarterly. Protect your social security number. Pay bills online and avoid having any bank statements mailed to your house. Shred any documents that contain personal information and rather than tossing credit card application, opt out of card offers to reduce the chance that the offer could be stolen from your mailbox or trash and used to set up an account without your knowledge.


By Matt Reynolds - Google+
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Phone: 502-933-2255
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