Identity Fraud Insurance Explained

Identity fraud insurance is a fairly new insurance product that covers you in the event of identity theft. Given that an estimated one in every 14 Americans is the victim of identity theft each year, it's no surprise why so many people are interested in this type of coverage. Learn the basics of identity fraud insurance to determine if it is something you should invest in.

Cost of Identity Fraud

It should be noted that victims of fraud are rarely held responsible for debts accrued via fraudulent purchases and erroneous lines of credit (provided fraud can be proven). As a result, the majority of identity theft victims need not worry about carrying insurance to cover purchases and interest payments racked up by criminals.

However, while debts are typically not the responsibility of a victim, many expenses may be accrued during the painful process that comes with repairing credit. These expenses can add additional strain to the recovery process, and include:

• Lost wages due to time spent away from work in order to deal with fraud issues
• Notary public services and mailing costs related to delivery of fraud affidavits
• Lost loan application fees due to fraudulent credit activity
• Phone charges that accrue due to lengthy conversations with lenders, merchants and law enforcement
• Attorney fees

Who Benefits From Identity Fraud Insurance?

All of the expenses listed above are covered (at least partially) by identity fraud insurance. As such, any victim of fraud has the opportunity to benefit from this unique type of insurance. However, it should be noted that the major benefit of fraud insurance is payment for lost wages. As such, individuals who are self-employed or receive an hourly rate tend to benefit the most. Depending on the specific insurance package, reimbursement may be available for as much as $500 per week (for up to a months).

In extreme cases of identity fraud, victims can spend months or even years cleaning up credit. As a result, the need to take time off work to erase fraudulent debts is often necessary.

Should You Get Identity Fraud Insurance?

Even if you don't earn an hourly pay rate, the peace of mind offered by identity fraud insurance may make it worthwhile. Typically, such insurance is not exceptionally expensive (the average policy costs around $25 a year). Given this low fee, it's not uncommon for individuals of all walks of life to invest in this unique type of protection.