Last year’s Equifax hack, in which more than 140 million Social Security numbers were exposed, fortunately hasn’t prompted a wave of identity theft, at least yet. But a recent survey discovered that over 40 million Americans have had their identity stolen. Even including children, that means nearly 1 in 8 people in the U.S. has been the victim of identity theft.
If you’re unlucky enough to join that group, some financial impacts of the theft may be addressed--say from the unauthorized use of your credit cards. But not all may be covered, such as legal fees. If you suffer such losses, there may be some reprieve through your homeowners or renters insurance. Here are the ways you may be covered, including some options to buy protection if you don’t yet have it.
Identity Coverage Through Your Homeowners or Renters Insurance
It‘s possible that your current property insurance policy could have identity theft coverage written into it. Whether or not that’s the case, you may also be able to add ID theft coverage as a rider (or policy add-on). Using a rider, you can either add identity theft insurance to your existing policy or increase your coverage limits.
Just note that every homeowners insurance policy will differ and there are over a dozen different types of coverage included within a standard homeowners or renters insurance policy. Checking your policy will allow you to determine whether fraud coverage is already included, and what type of coverage it provides. In many cases, the coverage will help pay for the cost of restoring your identity, but some policies may cover additional expenses or have certain exclusions.
For standard coverage with both homeowners and renters insurance, a $500 limit on identity theft coverage is very common, but that number can vary depending on how much property coverage you’ve purchased. That figure falls far short of the potential losses when your identity is stolen.
Identity theft recovery can include all of the following expenses, each of which regularly can exceed $1,000:
In fact, 2014 data from the Bureau of Justice Statistics reveals the direct out-of-pocket loss for identity theft was nearly $4,000. This figure does not include the value lost from decreased productivity. Lifelock notes that the average time spent recovering from identity theft is 7 hours, although extreme cases could result in much more than that.
If you’re concerned about the potential costs of identity theft, you can increase the limits of your coverage through adding a rider to your policy. Indeed, this is a simple way to reduce your financial risks.
If your identity is stolen, to utilize coverage from your homeowners or renters insurance, whether from a rider or not, you’ll need to file a claim with your insurance company. That claim should include a police report detailing the fraud event, evidence of the fraud, an itemized list of damages, and may require proof of the steps you’ve already taken to stop further abuse (such as canceling your credit or debit cards, or registering for fraud alerts with a credit agency).
The Value of a Quick Response & Identity Theft Coverage
Most identity theft now seems to occur as a result of massive data breaches. Many point to big-name incidents like Equifax and Yahoo, but small-business breaches are just as common and perhaps more damaging given the slow release of information. In the case of most breaches where sensitive information is stolen, customers often aren’t informed until days, weeks, and sometimes even months after the event occurred. This makes responding properly to such events extremely difficult for consumers.
Responding swiftly to identity theft once you’ve learned you’ve been a victim, and knowing what insurance you have in place, can mean the difference between losing a few hundred dollars and taking a huge hit to your finances. Once your account information has been stolen and utilized by an identity thief, recovery can be very costly.
This content originated on ValuePenguin.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.