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Identity Theft Insurance: Top 7 Things to Know

March 15, 2022 - by Identity Champion

Picture it: you’ve just confirmed that your personal information has been hacked by a scammer who then used it to steal money from you. How would you respond? At that moment, wouldn’t you want assistance from a professional who knows exactly what to do next to help you recover stolen funds?

This is the purpose of identity theft insurance.  Like medical insurance, ID theft insurance serves as a failsafe for guaranteed assistance if “the worst should happen”– in this case, if your personal information is stolen and used to commit fraud. While basic identity monitoring is an excellent place to start (essentially functioning as an early warning system), you should also consider what kind of protection you’ll need if your information is used fraudulently. Identity theft insurance offers coverage to help you reclaim lost funds and repair your identity with minimal financial impact.

This article will explain what identity theft insurance can do for you and help you decide which features are most important to you as you evaluate coverage. 

The Top 7 Questions You Should Ask:

  1. What expenses or losses are eligible for reimbursement? It’s time-consuming and expensive to reclaim a stolen identity and the insurance policy you select should help minimize the negative impact. Check to see if the policy reimburses for expenses such as: legal and court costs, fees for an attorney or other professional like a CPA or private investigator, and lost wages and childcare expenses for time taken to amend and rectify records. To replace the funds that have been stolen from your accounts, check the policy for a Cash Recovery benefit. 
  2. What are the coverage limits for expense reimbursement and replacement of stolen funds? It’s important to clarify exactly how much reimbursement you can expect both for eligible expenses and the funds that were stolen. Pay particular attention to the limits for legal fees and eligible expenses. Expenses will continue to mount when you consider that most lawyers charge at least $100 per hour and repairing the damage of a stolen identity can take months, even years. On top of attorney fees you also need to factor in other legal and administrative costs associated with rectifying and amending records. All of these things take time away from your everyday life which could also cost you in lost wages or extra childcare expenses. 
  3. Is there a deductible? As with other kinds of insurance, there may be a deductible you have to pay before the policy begins covering your expenses. Before you sign up, clarify whether your policy includes a deductible and, if so, how much it is.
  4. What expenses or financial losses are excluded from reimbursement? Be sure to confirm what expenses or losses are excluded from reimbursement. Look for an identity theft insurance policy that covers lost wages or income, attorney and legal fees, the cost of refiling lines of credit, and elderly or childcare costs.   
  5. What is the fee for coverage? This will vary depending on the specific plan you choose, but it’s often worth paying a slightly higher premium to guarantee that you have the coverage you’d need in a crisis. 
  6. Is the fee billed monthly or annually? Do I have a choice? There’s often a discount for members who opt to pay for their coverage annually rather than monthly, but monthly payments can also be a great option for someone who doesn’t want to overcommit. 
  7. Can I buy this coverage as part of a more comprehensive identity theft protection plan? If you opt to use an identity protection service, in addition to identity theft insurance you may have access to features like dark web monitoring, lost wallet assistance, financial account take over monitoring and restoration assistance to save you time spent on phone calls and paperwork to reclaim your identity.

AAA Identity Champion Protect and Complete plans combine insurance coverage with practical services like internet, credit bureau, and dark web monitoring, as well as hands-on assistance from identity restoration professionals. Take a look at the variety of affordable plans we offer and choose yours today!

The content provided in this blog post is for informational purposes only, and is not intended to be an offer to sell any Identity Champion product or service. A3 Labs LLC makes no representations as to the accuracy or completeness of the information contained in this or any blog post on the Identity Champion website.