Identity Theft Insurance: What Is It & How Does It Work?
What is identity theft? Too few of us consider the possibility of such a serious crime as identity theft. Essentially, identity theft is a crime where your personal information, i.e your Social Insurance Number, your full name, your license, etc. are stolen by someone who intends to perform dishonest actions using your identity. This can result in you having a criminal record, significant debt, etc. – even when you never did anything wrong. It sounds like something that might only happen in the movies, but unfortunately the threat is very real. Ever since the COVID-19 pandemic, events of identity theft and fraud have been on a steady increase, and cases happen more often than you might think.
How do you know if you’ve been the victim of identity theft? Not many people are familiar with the symptoms, but they may include the following signs:
- You are receiving calls from banks or credit cards approving or denying applications that you never made
- You are no longer receiving credit card statements in the mail
- You are noticing mysterious withdrawals on your bank account
- Your credit card statements contain unusual or suspicious purchases
- You are receiving phone calls from collection agencies seeking funds for an account that you do not remember opening
Suffice to say, identity theft is a terrible thing for anyone to experience. The best way to mitigating the overall stress, emotional toll, and financial toll from such an event is to prevent identity theft altogether. That being said sometimes things happen. Read on for some tips to prevent identity theft and a briefing on how your home insurance might include something called “identity theft insurance” – which could be of help in the event of identity theft.
Avoiding Fraud and Identity Theft
Technically there is no absolute way to prevent having your identity stolen, but you can take preventative measures to ensuring the risk is very low. Whether you are out in public, at home, or making a purchase in-store, there are several ways you can reduce your risk.
Protecting yourself against fraud and identity theft can begin at home. Here are some tips:
- Unless you made the call first, do not give out any personal information over the phone
- Read your credit reports regularly to check for any unfamiliar accounts
- Shred paper documents that contain personal information once they are no longer in-use
- Check your mail frequently
- Review your credit card and bank statements to check for any unknown charges
When online, consider these tips:
- Avoid using public Wi-Fi for important transactions or online purchases altogether. Save this for home, when you have a secure connection
- Change your passwords regularly and make sure that your passwords are strong and varied
- Implement two-step verification for your financial accounts
- Request text notifications to verify every time a transaction is made on your credit card
- Do not share your personal address or birthday on social media
- Be cautious of potential phishing scams from your financial institution
When you are out and about in public, consider the following tips for protecting yourself against fraud and identity theft:
- If you are planning to use an ATM, make sure no one is watching you
- Avoid carrying too many items with personal information on them
- Never tell anyone your PIN number or say it aloud
- When going to a store or making a purchase, avoid using too much personal information
How Identity Theft Insurance Helps
Did you know that the majority of home insurance providers offer the option of identity theft insurance? It can be added to your existing home insurance policy for a slight increase in your premiums. Identity theft insurance can help to cover any legal expenses you may encounter when choosing to challenge information in unusual credit reports and protect you from defense costs in any lawsuits from collection agencies or stores. Identity theft insurance may also help cover the costs of contesting wrongful transfer of property ownership and removing judgements filed against you.
If you must take time off work to resolve any issues pertaining to identity theft, your identity theft insurance may cover lost wages as well. If you must re-apply for new government identification following an identity theft event, your insurance may cover this as well.
Should an unexpected event occur, and you suspect your identity may have been stolen, follow these steps:
- Immediately report the event to the police and ask for a copy of the police report. This will stand as your proof of theft for any company, shop, or agency you need to contact.
- Call your bank and/or credit card company to put a notice on your accounts.
- Call up your respective TransUnion Canada or Equifax Canada to put a fraud alert on your credit reports.
- Report the instance to the Canadian Anti-Fraud Centre.
- Call any utility provider to advise them that someone who is using your name may be trying to open new accounts.
Identity theft insurance is often included within your home insurance policy or may be a small additional cost. Identity theft has still been incredibly prevalent since the pandemic. While exact coverage varies from provider to provider, identity theft insurance will typically cover the following:
- Public record searches
- Loss of wages
- Notary and certified mailing fees
- Defense costs
- Re-application for government-issued identification
- Police monitoring of black-market websites for information
For more information about identity theft insurance or how much it may cost you per year, contact an Excalibur Insurance Group professional. Often identity theft insurance coverage is included within home policies we offer. On occasion there is an additional premium for the coverage, generally under $50 per year. Given the time it may take to resolve an identity theft issue, it’s a coverage that is great to have and will pay for itself a hundred times over.