WHAT IDENTITY THEFT INSURANCE COVERS
Identity theft is the act of taking personal information—like Social Security numbers or bank account numbers—and using it to “impersonate” someone for the purpose of stealing.
These crimes are usually financial in nature. For instance, identity thieves typically use stolen credit card numbers, take money from victims’ bank accounts, open unauthorized credit cards, and obtain unauthorized bank loans.
Identity theft victims repeatedly spend months or years recovering from the frauds perpetrated on their bank accounts and getting their credit rating corrected. It is important to protect one’s self against identity theft with this advice.
In some more detailed schemes, criminals even use the stolen personal information to get a job, take out an insurance policy, rent a home or take out a mortgage in the victim’s name.
By stealing or otherwise obtaining physical documents – Many identity theft cases are the result of a lost or stolen wallet, checkbook, credit card or another physical document. Some store credit cards may still require Social Security numbers or other credit information on their written applications—there have been instances of these applications being stolen and used by identity thieves. More intrepid thieves use old-fashioned methods, such as ‘dumpster diving’— i.e. rooting around in people’s garbage to collect financial information.
By stealing or obtaining hardware – laptops, thumb drives, and other electronic data storage devices are a rich source of one’s personal information.
However, identity theft comes with not only financial loss but far-reaching consequences like blows to one’s credit and reputation that may take much time and paid professional know-how’s to resolve. As a result, many companies now provide insurance products that not only cover costs associated with identity theft incident recovery but also provide “restitution” services to make the process easier and faster.
Coverage and Services that may be Provided
Policies vary by insurer and by state, but some of coverage and services that may be provided include:
- Assignment of a consumer fraud specialist or case manager
- Replacement of government issue identifications
- Assisting with civil judgments, criminal charges, audits or hearings related to fraud perpetrated by the “impostor”
- Resolution services to help reclaim identity and restore credit
- Reimbursement of attorney’s fees
- Reimbursement of administrative fees and expenses and fees
Here are Some Precautions One Needs to Take
- Keep the amount of personal information in the purse or wallet to the bare minimum. Avoid carrying additional credit cards, social security card or passport unless absolutely necessary.
- Safeguard the credit card when making purchases. Be vigilant about good credit card keeping habits—for instance, make it a point to keep the wallet in at hand until the clerk gives back the card. Don’t fall prey to “shoulder surfers” who may be nearby— the individual should shield his/her hand when using ATM machines and be alert to those around him/her when giving out personal information on the phone.
- Always take credit card or ATM receipts. Don’t throw them into public trash containers, leave them on the counter or put them in your shopping bag where they can easily fall out or get stolen.
- Do not give out personal information. Whether on the phone, through the mail or over the Internet, don’t give out any personal information unless the individual has initiated the contact, are sure he/she knows who he/she is dealing with and that the line is secure.
- Proceed with caution when shopping online. Use only secure, authenticated websites to conduct business online. Before submitting personal or financial information through a website, check for the locked padlock image on the browser’s status bar
- Be aware of phishing and pharming scams. In these scams, criminals use fake emails and websites to impersonate legitimate organizations. Exercise caution when opening emails, attachments and instant messages from unknown sources. Never give out personal, financial or password related information via email.
- One’s credit report contains information on where he/she works and lives, the credit accounts that have been opened in his/her name, how he/she pay his/her bills and whether he/she have been sued, arrested or filed for bankruptcy. Make sure these reports accurate and includes only those activities he/she have authorized.
- Place fraud alerts at the major credit bureaus. A fraud alert tells creditors to contact the owner before opening any new accounts or before making any changes (like changes of address) to the existing accounts. This makes it more difficult for identity thieves to open accounts in one’s name. One just has to contact one bureau; by law, the agency he/she contacts is required to contact the other two.
- It is important to use secure passwords on one’s credit card, bank and phone accounts. Avoid using easily available information like mother’s maiden name, birth date, any part of Social Security number or phone number, or any series of consecutive numbers. If he/she suspects a problem with his/her credit card, change his/her password.
Mince documents with personal information before disposing of them. This includes any paperwork with credit card numbers, bank statements, charge receipts or credit card applications.
And if an individual had a theft where his/her personal information has been compromised, such as stolen wallet or credit cards or a phishing scam, he/she should immediately report it to the credit card company, applicable financial institutions, and to the police.
He/she should also endeavor to ask for a copy of the police report because he might need it when filing an insurance claim.
ALSO READ: What Does Theft Insurance Cover?
If an individual is—or suspect he/she has been—the victim of a phishing scam or other electronic incident, he/she should immediately report the incident to any of the financial institutions of his/her choice or credit card companies that might be compromised, and try to register a fraud alert with a credit reporting company.