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Identity theft and identity fraud are terms that are often used interchangeably, yet these terms signify two different types of crimes. Identity theft refers to unauthorized access to personal information such as Social Security numbers or bank account numbers. Identity theft becomes identity fraud when this personal information is used for financial gain such as opening new credit card accounts. ID theft is a big business for thieves. A recent 2017 study by Javelin Strategy and Research showed that 16.7 million Americans were victims of identity theft, which resulted in $16.8 billion in identity fraud.
There are actions people can take to minimize the risk of being victims of ID theft, and having ID theft insurance can minimize the damage if it ever happens. An ID theft policy reimburses the victims for some of the costs that it takes for them to regain their financial identity. These costs can include getting a copy of and repairing a credit report, paying long-distance phone bills, paying legal fees, or recovering lost wages.
An ID theft policy can be added to a homeowner’s or a renter’s insurance policy. It can also be purchased as a stand-alone policy. Business owners can also provide ID theft policies as part of their overall benefits package. Reimbursement amounts can range from $10,000 to $1 million. These policies have restrictions, so it is important for policyholders to understand what is excluded from reimbursement. For instance, certain types of recovery work, legal fees, or lost wages may not be covered under certain policies. Another item to consider is the deductible because the cost of the deductible may end up being higher than the cost of some of the recovery efforts.
When choosing a policy, it’s important to understand the policy limits, the deductible amount, and any exclusions. It’s also important to keep in mind that children can be victims of identity theft. Working with an insurance agent is important for individuals and families. An agent can help them determine if having an ID theft policy is right for them and what type of coverage is appropriate for their needs.