To Buy or Not To Buy Identity Theft Insurance

Written by on 2015-03-02 5:48 AM in , , , , . It has 0 Comments.

 

That’s the big question a lot of people are asking themselves lately. While more and more people are coming to understand how identity thieves get their personal information, what people don’t realize is the tactics change as technology changes. The first step in identity theft protection starts at home. There are many things you can do to lessen the chances you could become a victim of identity theft and any prudent person should do these things.

Related Read: Protect Yourself from Identity Theft

As our society becomes more connected through the internet and more reliant on technology to process information more dangers become apparent. Any company where you use your credit card or stores your personal information in the course of its day to day business of serving your needs could be hacked. We’ve seen some spectacularly large hacks recently – Target, Sony, Home Depot – which have affected millions of people. Cyber Risk Liability is fast becoming an issue for businesses precisely because of the risks to their client’s finances.

Related Read: Can Cyber Risk Affect Your Business?

What this means is that there are far greater dangers a person’s information is exposed to than just the usual phishing and dumpster diving. A wily thief can track and follow a victim’s social media account to determine when they’ll be away from home or on an extended vacation. Sophisticated hackers can target a specific business and mine all client data. High Tech or Information Technology companies also have to be concerned with cyber risk because they deal almost entirely online, where vast amounts of data are accumulated and stored.

Related Read: IT Insurance Whitepaper: What Your High Tech Company Needs to Know

Your Bank Will Maybe Reimburse You – But When?

If someone fraudulently accessed your bank accounts and drained them of all funds your bank would likely refund you or restore your missing funds. But, how quickly do you think that happens? How much time do you think it would take to clear your good name in the event you found yourself the victim of identity theft? Banks and their regulators have their processes when dealing with fraud and these processes could take some time before being corrected. And that’s for a relatively simple claim of losing funds from a bank account. For larger claims, such as someone fraudulently taking out a loan using your home as collateral, it could take a lot longer to resolve.

What Does ID Theft Insurance Cover?

Unfortunately, there is a great deal of misinformation on what ID Theft Insurance actually is.  Let’s start with what it doesn’t cover; the actual funds an ID theft victim has lost. A person who suddenly finds their home sold out from under them, or finds their bank accounts emptied, won’t be able to claim for the money they’ve lost. Identity Theft can’t protect you from becoming a victim.  What Identity Theft insurance covers are the expenses you will incur while getting your funds back. Depending on the severity of the fraud you could find it necessary to seek the aid of a lawyer, go to court, file affidavits and more. Lawyer and court costs can add up quickly and the more complex the situation the greater the amount of legal work required to clear up the problem. Over the course of fighting against identity fraud a victim’s lawyer fees could add up to thousands of dollars. Add in court costs, missed work, claim filing, and more and suddenly you could find yourself spending $10,000 or more.

How Much Does ID Theft Insurance Cost?

At Erb and Erb Insurance Brokers Ltd. the costs of adding an Identity Theft Endorsement to your home, condo, or tenants policy varies between $30 to $50 per year, depending on the company you’re insured with. Coverage limits vary from $20,000 to $30,000 for legal expenses, missed work and other costs. Some insurance companies provide consultations with lawyers as part of their identity theft insurance package. Other insurance companies add credit tracking and monitoring to their package. There are many options to fit your personal, family or business situation.

Recently, smart tv’s have been introduced where they can listen to your conversations in the privacy of your own home and share those talks with a third party. CBC’s article here shares the concerns of this technology in an article here.  The internet of things means more and more of our appliances, vehicles, and homes will be interconnected, creating a huge amount of data. Any data stored could be hacked.

In an increasingly connected world where our personal information is a hot commodity, both legally and illegally, having extra protection to help fight identity fraud is a good thing.

Have any questions or comments? We’d love to read them below.

Thanks for reading.

Back to Quarterly ProvERB Insurance Bulletin, Spring 2015.

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