Why Personal Identity Theft Insurance Isn't Worth It

Author: Paul Wilcox

Article: Personal identity theft has become a media favorite over the last several years.  In fact, it has received perhaps more media attention than it deserves according to some experts.  Personal identity theft has become so prevalent in the news and in the consumer mind that a new type of insurance has actually arisen from it.  This type of insurance is known as personal identity theft insurance.

What Does It Cover?

The insurance itself generally costs about $25 to $50 per year and covers from $15,000 to $25,000 of costs including lost wages from time to taken off from your job to deal with the fraud problem. Coverage for job loss is usually capped at $500 per week for a maximum of four weeks. This insurance may also cover some legal fees.

Some insurance may also cover special mailing charges to mail fraud affidavits to the correct people. Fees for credit cards and loans that were applied for and rejected due to false information are at least partially covered.

Long distance bills for calling banks and other merchants and law enforcement agents to discuss the fraud can also be covered.

While this may seem like a good deal for the price, consumers need to keep in mind a few things.  First of all, identity theft is very unlikely.  In fact the likelihood of being a victim of identity theft is just 0.35%.  This makes identity theft a very unlikely occurrence.

The coverage may seem adequate but when actually broken down, parts of it aren't very useful. For example, the lost wage item sounds good but at $500 a week, it's not enough to cover what many people would be making. As well it doesn't consider that many people are unable to take time off from work.

Personal identity theft coverage doesn't fix your credit or criminal record as home or auto insurance might do. It strictly helps with the expenses so you can fix it on your own. The expenses entailed generally don't surmount $1,000 so you may find that purchasing a policy is of no benefit.

Are you looking for more ways to stop identity theft? You'll find more helpful information about how to protect yourself from this and other security threats at the Online Security Toolkit website.