October 14th, 2013

Protecting Yourself From Identity Theft Recovery Costs


Protecting Yourself From Identity Theft Recovery Costs

**Today’s guest post is contributed by Carrie and Samantha.**

Fires, high winds and other natural disasters can devastate your home and your finances – that’s why you have home insurance. Standard policies protect you from those and other perils. But another disaster also can affect your financial well-being and, ultimately, your home. Identity theft doesn’t ride in on a storm or spring to life like a fire. It strikes silently – you’ll suffer most of the damage from it before you know it. Unless, of course, you’ve taken precautions such as purchasing identity theft insurance.

How prevalent is identity theft? Javelin Strategy & Research reported 12.6 million instances of identity fraud last year, with about $21 billion being stolen. When criminals get your personal information, they can strike quickly, running up big bills, ruining your credit score and making it hard for you to get credit, obtain loans or even find employment.

Recovery from identity theft often is a long and frustrating process – reversing the damage can take years. Many insurance carriers offer identity theft insurance – either as an endorsement to your home or renters insurance policy or as a stand-alone policy – to help make the road to recovery a bit smoother.

What’s covered- and not- with identity theft insurance?

A common misconception when it comes to identity theft insurance is that it reimburses you for the money that was stolen. In reality, direct monetary losses are not covered with identity theft insurance. That means, if the criminal who stole your identity blew $5,000 at Nordstrom and then bought a Maserati, identity theft insurance will not reimburse you for those losses – although in many cases banks and credit card companies do limit how much you can lose.

Instead, it helps pay your expenses for regaining your identity. Some of these expenses may include:

  • Reimbursement for medical ID fraud expenses
  • Travel expenses
  • New identification cards
  • Tax ID fraud-related costs
  • Lost wages
  • Attorney’s fees

Some policies also include guidance and resolution services from a consumer fraud specialist who will help you through the process of restoring your identity.

What are the coverage limits?

While identity theft insurance coverage can vary from policy to policy, most policies offer $15,000-$25,000 worth of coverage for a particular claim. A standard identity theft insurance policy typically does not carry a deductible, meaning you won’t have to pay anything out-of-pocket before your policy starts to pay.

Premiums obviously vary with the amount (and type) of coverage you purchase. Some homeowners who purchase a premium homeowners insurance policy will have this coverage included at no extra cost. For others, most insurers will offer this coverage for as little as $25-$50/year. At $4/month, most consumers consider this a no-brainer financial product.

Questions to ask when purchasing identity theft coverage

As with any financial protection product, it’s important to understand your policy. Here are a few key questions to ask your insurance agent when comparing various identity theft insurance policies:

  • What is the monthly/annual premium and can this be bundled into my homeowners or renters policy?
  • What are the limits for coverage under this policy?
  • Is there a deductible?
  • Does the policy include support from a credit repair specialist?
  • How quickly are claims typically processed?

The big key is understanding that identity theft is real; about 11.6 million fall victim annually, according to the U.S. Department of Justice. Take measures to protect your information from being taken and protect your finances – and reputation – from being damaged.

This article was contributed by Samantha Alexander and Carrie Van Brunt-Wiley, contributors to the HomeInsurance.com Blog. The HomeInsurance.com blog serves as a resource center for insurance consumers and homebuyers across the country.

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

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March 17th, 2013

All the Single (or Married) Ladies: Why it’s Important to Have Financial Independence

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Imagine this: You’re a happily married stay-at-home parent and your husband has been supporting the family with his one income for years. You’re frugal and smart with the family money, but then your husband is laid off and has trouble finding work. You’re forced to drain your savings and max-out the only credit cards you have—the ones you hold jointly.

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September 3rd, 2011

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August 23rd, 2011

The Perfect Password, and How to Keep Your Information Safe

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We know you’re smart enough to avoid using passwords like the aforementioned “password123,” or your name plus your birth date. But as hackers get more sophisticated, so should you. There are a lot of different suggestions out there for how to build a great password. (Time magazine suggests using a dictionary word and replacing letters with numbers.) But a dictionary word can be cracked by a computer program relatively easily.

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March 15th, 2011

Foreclosure and Bankruptcy: What’s a Struggling Homeowner to do?

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When you’re in dire straits with a home foreclosure notification in hand and no means to pay your mortgage, you might have another way out, MSNBC reports.

Filing for bankruptcy may allow you to keep your home if the court can work out a payment plan with the lenders. But does that mean bankruptcy is best for you?

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October 12th, 2010

Why Oppose The Foreclosure Moratorium?

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Foreclosures are awful. So why not stop foreclosing? That’s the question being asked—and answered—as the government and lending banks consider a foreclosure moratorium.

Read more in this special LearnVest guest post!

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October 5th, 2010

From Renter’s Insurance To Disability Insurance, Find The Best Insurance For You


It’s often tricky to navigate which kinds of insurance you do and don’t need. So, LearnVest breaks it down with some simple rules of thumb.

LearnVest breaks down what each kind of insurance does and things to note. Don't miss it!

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September 10th, 2010

For Underwater Homeowners, Will The New FHA Short Refinance Program Save You?

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The government is stepping up (again) to help underwater homeowners with the FHA’s new Short Refinance program. However, ghosts from past government housing efforts threaten to sink this program before its barely gotten underway.

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September 7th, 2010

Is It Okay To Crack Open Your 401(k) Nest Egg?


When stormy economic conditions are present—like nowadays—more and more people are doing the financial equivalent by cracking open their 401(k) nest eggs, and even more people are wondering whether that’s okay. The short answer is… NO!

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August 30th, 2010

Review: BillFloat – Can’t Pay Your Bills? They Have you Covered (For A Fee)


BillFloat, founded in 2009 and incubated by PayPal, has a simple, fresh solution to an old problem—what to do when you can’t pay the bills.

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