Identity theft insurance helps the policyholder with some of the expenses incurred during recovery from identity theft. Identity theft occurs when someone steals another person’s identifying and financial information, such as their name, bank account numbers and credit card numbers, to commit fraud. An identity thief can use this stolen information to illegally open new accounts, obtain loans and receive medical care. They can also file taxes and receive a return with this information.
Identity theft insurance reimburses the victim for the costs of reclaiming their financial identities and restoring their credit. The recovery process can be expensive and take a lot of time and effort. If the policyholder has to take time off from work, identity theft insurance may pay for lost wages.
Identity theft insurance may cover expenses such as long-distance phone bills, notary fees, mailing costs, and attorney fees. Some policies provide coverage to pay for childcare and obtaining credit reports.
A policyholder can receive reimbursement for legal fees and court costs associated with civil judgments, criminal charges, audits, and hearings related to identity theft. Replacement of government-issued identifications may also be covered by identity theft insurance.
Identity theft insurance policies do not provide reimbursement for money that is stolen from bank accounts or repay credit card balances. The policy may provide the policyholder with coverage for loan application fees if the loan was rejected or denied due to credit fraud.
Some policies provide a specialist who can guide victims through the identity recovery process. The specialist or case manager may contact the victim’s creditors and merchants to review accounts and make corrections.
Identity theft insurance may include a service for monitoring credit and accounts. The policyholder will be notified of any credit inquiries are made. This service helps protect the policyholder’s personal and financial information from fraud and theft.
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