The Difference Between ID Theft Insurance and an ID Theft Program
By Mark Pribish, Director of Identity Theft Management Services 
Merchants Information Solutions, Inc.

There have been some recent news articles questioning why an individual consumer would or should purchase an identity theft insurance policy. 

So the question should not be whether or not a consumer should or should not purchase identity theft insurance.  Instead, the questions to consumers should be:  (1) What does the identity theft insurance mean to me as a consumer including, what does it cover and (2) What is the difference between identity theft insurance and a comprehensive identity theft program?

What does identity theft insurance mean to me as a consumer and what does it cover?  Identity theft insurance policies typically protect an individual consumer for expenses associated with the recovery of one’s identity. 

This means that if an individual required the services of an attorney, private investigator, or any company providing some type of identity recovery service – the identity theft insurance policy would pay for said services.  Other expenses that can be reimbursed for recovering one’s identity include lost wages, notarizing affidavits, long distance calls, tolls, postage, and even travel – as long as the expense is related to recovering one’s identity.

Identity theft insurance can be offered through your credit card company, financial institution, association membership, homeowners or rental insurance policy, or even as a stand alone identity theft insurance policy. 

There are some critics of identity theft insurance who believe that every individual consumer is capable of recovering their own identity and that identity theft insurance is not necessary.  However, the only one who can really decide whether identity theft insurance is right for you is, you. 

Here are some basic questions that you should ask when an identity theft insurance policy is either being offered to you as a customer/member benefit or being sold to you through your insurance agent or third party marketing organization:

1. Does the identity theft insurance policy include family fraud?
2. Does it include unknown, pre-existing identity theft relaYouted events/fraud?
3. Does it include self-employed individuals?
4. Does it include benefits for children from date of birth to 24 years old?
5. Does it include children attending college, living away from home whose primary address is the parents address?
6. Does it include individuals who are a lifestyle partner?
7. What are the limits of coverage – as numerous polices range from $1,000 to $25,000 in policy limits?

These are some of the questions a consumer should ask when reviewing any identity theft insurance policy.  These are also the same questions that only an individual consumer can answer based on his or her circumstances -- so that they can make an informed choice. 

The second question a consumer should ask is what is the difference between identity theft insurance and a comprehensive identity theft program?  A comprehensive identity theft program has at least four individual components that support a proactive and responsive approach to help consumers manage the challenges of the over 400 data breaches affecting over 100 million individual consumers in the last two years.  These four components include:

Fully Managed Recovery – through a Limited Power of Attorney (LPOA), is very specific in time and scope where a professionally trained recovery advocate is assigned to manage a victim of ID Theft from beginning to end until said victim is returned to pre-identity theft event status.  Also, if the individual customer is not comfortable signing the LPOA, the identity theft provider can service the customer at whatever level they wish.

Benchmarking – by providing credit report/score and daily monitoring and daily alerts to support a proactive approach in monitoring an individual’s credit report.

Insurance Reimbursement – up to $25,000 in total reimbursement including legal expenses, lost wages, notarizing affidavits, long distance calls, tolls, postage, etc.

Education – through website access and newsletters via email, education is a powerful tool in fighting identity theft.  Content commonly includes protection tips, a risk quiz, identity theft related news stories, and trends.

Similar to identity theft insurance, comprehensive identity theft programs are being offered through financial institutions, association memberships, employer groups, and other companies/organizations.  A consumer should ask the same questions (listed above) about what is included – as well as excluded -- as a part of any comprehensive identity theft program.

While critics of identity theft insurance believe most people can recover their own identity, most of the same critics do not know whether you will have the time or money – especially during the work day – to make contact and complete the proper follow-up with all the companies including the credit bureaus, Division of Motor Vehicles, Social Security Administration, Federal Trade Commission, along with other state and federal agencies, financial institutions, credit card companies, insurance companies, utility providers, phone companies, past and present employer groups, etc. 

In conclusion, as an individual consumer, you owe it to yourself and your family to consider either an identity theft insurance policy or membership in a comprehensive identity theft program to support an identity theft event – especially a complicated identity theft event that could impact your credit score, employment application and/or insurance rates.