Identity theft is the fastest growing crime in the U.S, according to the Federal Citizen Information Center (FCIC). In 2006 the Federal Trade Commission (FTC) reported that approximately 8.3 million Americans were victims of identity theft, and that number is growing. Recent reports indicate that as many as 10 million people in the United States fall victim to this crime every year. Identity theft costs businesses $50 million in fraudulent charges each year, and innocent consumers pay a grand total of $5 million just to repair their good names.
According to the U.S. Department of Justice, identity theft refers to “all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain.”
Fortunately, there are ways to protect yourself from this prevalent crime. First and foremost, consumers can take multiple precautions to protect their identities. On top of that, most major insurance carriers now offer Identity Theft insurance protection through standard homeowner’s and renter’s insurance policies.
Identity Theft Insurance 101
If you become an identity theft victim, Identity Theft insurance covers many of the costs associated with restoring your identity and repairing the damage to your personal financial information. This type of insurance generally reimburses victims for:
- Lost wages
- Phone bills
- Mailing and notary costs
- Attorney fees
An increasing number of insurance carriers are adding identity theft coverage to their standard homeowner’s insurance policies. Some other insurers offer it as optional coverage or as a stand-alone policy. These policies generally cost between $25 and $50 a month for up to $25,000 worth of coverage.
Is it worth it?
Victims of identity theft aren’t merely inconvenienced-they generally lose a significant amount of money, as well. According to Javelin Strategy and Research, victims of identity fraud in 2007 lost an average of $6,000 each. The average identity theft victim spends over $800 on administrative expenses alone, including phone bills, and postage and notary expenses, according to the Identity Theft Resource Center, an independent non-profit organization.
Of course, that $800 price tag does not include lost wages from missed days of work, the number of hours victims spend trying to resolve the issue or the emotional price victims often pay. Statistics show that the average victim spends more than 170 hours trying to repair the damage caused by identity theft.
According to a 2004 identity theft study conducted by The Identity Theft Resource Center (ITRC), identity theft victims reported a number of unexpected secondary effects, including difficulties in obtaining credit, clearing accounts, obtaining or holding a job and adverse effects on insurance or credit rates. And oftentimes, the harms of identity theft can reach far beyond a person’s finances. The ITRC discovered that in 2004 more than 40% of identity theft victims reported stressed family life and 9% of the victims said their relationship was “on the rocks” or ended altogether as a result of the identity theft.
Considering these alarming statistics, Identity Theft insurance is absolutely worth the cost for most, if not all, consumers. In the long run, this insurance coverage could save you untold amounts of time, money, stress and heartache.
You can take a number of proactive steps to shield your personal information. Here are a few of the precautions the US Federal Trade Commission recommends consumers take to protect themselves from identity theft:
- Shred documents and paperwork that contain personal information before you discard them.
- Never click on links in unsolicited emails; instead, type in a web address that you know.
- Use firewalls, anti-spyware and anti-virus software to protect your home computer.
- Keep your personal information in a secure place at home.
- Request your credit report each year and check the reports for inaccuracies.
- Always look for discrepancies in your financial bills and statements and question them immediately.
- Collect your mail as soon as possible and drop outgoing mail containing financial information at the Post Office.
- When shopping online, make sure the company is reputable, displays an approved security symbol and uses an encrypted page to take payment details. The encrypted page should not generate warnings about being signed by an unknown authority.
- Stop pre-approved credit card mail offers by calling 888-5-OPT-OUT (888-567-8688).
- Don’t carry your Social Security card in your wallet or write your Social Security number on a check.
- Freeze your credit so that no one can open any form of credit in your name.
If you suspect that you have been a victim of identity theft, do the following immediately:
- File a police report to document the theft.
- Contact one of the three major credit bureaus and ask them to place a fraud alert on your Social Security number. (The three credit bureaus are Equifax: 800-525-6285; Experian: 888-397-3742 and Trans Union: 800-680-7289)
- If your wallet was stolen, call your credit card companies and cancel all your missing cards.
- Check your credit report to see if any fraudulent accounts have been opened.
- If your wallet contained any checks or ATM cards, notify your bank right away.
File a fraud complaint with the Federal Trade Commission at www.consumer.gov/idtheft.