An identity theft insurance policy can reimburse an individual for some of the expenses incurred from the day to day activities and efforts made in trying to restore his/her identity and to also repair his/her credit.

Identity Theft Coverage

Identity Theft Coverage

Below is the list of the expenses that might be covered:

  1. Copies of your credit reports
  2. Long-distance phone calls
  3. Lost wages
  4. Notary fees
  5. Mailing documents
  6. Legal fees
  7. Child care costs
  8. Credit monitoring services

It is also important to note that this depends on the policy one is into and what it covers.

Also keep in mind that, identity theft insurance does not cover direct financial losses the individual may incur as a result of identity theft. It only reimburses some of the expenses that happen after identity theft occurs.

Identity theft insurance, like some identity theft protection services, can aid victims of identity theft cover some of the financial costs when identity fraud occurs.

When deciding whether to buy identity theft insurance, it’s important to understand what the policy covers. For instance, one policy may include some legal fees, while another may not include such.

Also, if the individual has to take time off from work to restore his/her identity, he/she will want to understand the details of how a policy may reimburse him/her for lost wages. In other words, as with any insurance policy, it’s important to understand the fine print.

How it works

Identity theft insurance will reimburse a policyholder for expenses incurred to restore his or her identity, up to the limits stated in the policy. Coverage limits can range from $10,000 to $1 million, according to Barnett, the former leader of the Identity Theft Protection Association.

Although such high limits may sound generous, it is good to note that it pays to scrutinize the coverage terms. “Informed consumers must carefully read the fine print to understand the terms, conditions and exclusions,” he says.

Here are some important considerations:

The considerations are as follows:

  1. Are any other services included? Even if an identity theft insurance policy will reimburse or offset the costs involved in resolving the incident, it won’t reduce the time and hassle required to rectify the situation. The individual should ask if the insurer will provide help with any of the recovery work.
  2. Is there a deductible? A significant deductible, such as $500 or more, is not unusual for identity theft insurance, Barnett says. If the costs to repair the damage to the individual’s identity are less than the deductible, he/she may not get any help with those bills.
  3. Does the policy cover legal expenses or lost wages? Legal expenses and lost time from work may not be covered under identity theft policies, or payouts might be limited and preapproval may be required. Barnett says, because identity theft can be so costly, a policy that specifically provides reimbursement of lost wages or legal fees may be worth the premium.


The Identity theft insurance may cover expenses such as phone bills, lost wages, notary and certified mailing costs, and even attorney fees amongst others, according to Michael Barry, a spokesman for the Insurance Information Institute.