If you are the victim of identity theft, getting your credit history and reputation back can consume time and money. Basic identity theft insurance covers the costs associated with closing unauthorized accounts and removing fraudulent transactions from your credit history. More advanced plans often include fraud prevention and detection services as well as reimbursement for stolen funds. Here are the most important things to know about identity theft insurance.
This article will cover:
- What does identity theft insurance do?
- What does identity theft insurance cover
- How to get identity theft insurance
- Why identity theft is on the rise
- Is identity theft insurance worth it?
What is identity theft insurance?
Identity theft insurance generally covers the expenses that can accrue as you repair the damage that identity thieves can cause to your financial and personal history. The most significant consequences include:
- A lower credit score, which can impact your ability to get a loan in the future or leave you with higher interest rates.
- Debts for unauthorized financial transactions.
- Loss of funds from your bank, retirement or investment accounts.
- Legal jeopardy for crimes committed by others using your identity.
While standard home insurance generally does not cover identity theft, you can usually purchase it as an add-on to your homeowners or renters policy.
Several companies not affiliated with home insurers also offer identity theft insurance, often in packages that also include credit monitoring and other identity theft protection services.
What does identity theft insurance cover?
A basic identity theft insurance plan primarily focuses on reimbursing you for the various fees and other costs that can arise as you try to restore your identity. These commonly include:
- Identity and credit score repair costs.
- Administrative and legal fees.
- Government ID document replacement.
- Notary and certified mail fees connected to credit repair.
- Travel expenses, lost wages and certain other costs that may arise.
- Services of a credit repair specialist to manage the process for you.
More advanced identity protection plans include:
- Credit monitoring
- Change-of-address request notifications
- Dark web monitoring
- Stolen funds compensation
Credit monitoring generally notifies you of changes to your credit file, including the use of your Social Security number for a loan or credit application. Some plans offer three-bureau monitoring, while others only monitor your credit with one of the three major bureaus. Three-bureau monitoring can potentially detect suspicious transactions quicker than one-bureau monitoring.
How to get identity theft insurance
You have some options to get ID theft insurance:
- Check if identity theft coverage is part of your renters or home insurance policy.
- Talk with your home insurance provider to see if identity theft insurance is available as an endorsement add-on.
- Purchase identity theft insurance through credit bureaus or identity theft protection companies.
Identity theft insurance is also available through many credit card providers and financial institutions, like banks and credit unions, but their coverage may be limited to unauthorized transactions.
How much does identity theft insurance cost?
ID theft coverage can usually be added to your home insurance policy for an average of $25 to $60 a year according to the NAIC. This price may vary if you have a deductible. Deductibles for identity theft insurance are usually around $500.
Plans that package identity theft insurance with credit monitoring and other services range from $10 a month to $25 a month or more, depending on the company and coverage tier you choose.
| Plan | Monthly cost | Plan highlights |
|---|---|---|
| Allstate Premier identity protection | $18 | One-bureau credit monitoring, up to $1 million for ID restoration and $500,000 for stolen funds. |
| Āura individual fraud protection plan | $12 | Combined $1 million limit for credit restoration and stolen funds, three-bureau credit monitoring, credit repair specialist and home-device security. |
| LIfelock by Norton Advantage Membership | $23 | Three-bureau credit monitoring, $1 million identity restoration limit, $100,000 stolen funds limit and credit repair specialist. |
| Nationwide identity theft protection | $4 | Credit monitoring, and up to $25,000 in credit repair costs and access to a case-management specialist. |
| State Farm Cyber Event, Identity Restoration and Fraud Loss (CEIDR) | $2 | Combined $50,000 limit for credit repair and stolen funds, plus cyber protection. |
| Rates and program features obtained from provider websites. | ||
Why identity theft is on the rise
Identity theft continues to be on the rise into 2023. We found that there has been up to a 150% increase in identity theft reports in certain states since 2019.
The sharp increase in identity theft reports started during the COVID-19 pandemic, and every single state has had an overall increase in identity theft over the past 3 years. States such as West Virginia, Kansas, and Louisiana have been hit particularly hard with their identity theft reports more than doubling in the 3 year timeframe.
| Rank | State | 2019 ID Reports | 2022 ID Reports | % Increase |
|---|---|---|---|---|
| 1 | West Virginia | 1061 | 2657 | 150% |
| 2 | Kansas | 2272 | 5651 | 149% |
| 3 | Louisiana | 10584 | 24898 | 135% |
| 4 | Pennsylvania | 20910 | 47143 | 125% |
| 5 | Ohio | 13787 | 30950 | 124% |
| 6 | Mississippi | 4714 | 10260 | 118% |
| 7 | Virginia | 10289 | 22177 | 116% |
| 8 | Delaware | 2187 | 4682 | 114% |
| 9 | Rhode Island | 1145 | 2420 | 111% |
| 10 | Alabama | 8439 | 17763 | 110% |
| 11 | Indiana | 6387 | 12422 | 94% |
| 12 | North Dakota | 448 | 848 | 89% |
| 13 | Illinois | 23140 | 42558 | 84% |
| 14 | Massachusetts | 8606 | 15518 | 80% |
| 15 | Kentucky | 2978 | 5334 | 79% |
| 16 | Connecticut | 4567 | 8129 | 78% |
| 17 | Arizona | 10753 | 19018 | 77% |
| 18 | Wyoming | 318 | 552 | 74% |
| 19 | Florida | 64851 | 111221 | 72% |
| 20 | Maine | 809 | 1377 | 70% |
| 21 | North Carolina | 18586 | 31609 | 70% |
| 22 | Colorado | 6275 | 10671 | 70% |
| 23 | New York | 36341 | 60835 | 67% |
| 24 | Washington | 7111 | 11877 | 67% |
| 25 | Vermont | 338 | 564 | 67% |
| 26 | Wisconsin | 5023 | 8319 | 66% |
| 27 | South Carolina | 10848 | 17908 | 65% |
| 28 | Oklahoma | 3705 | 6068 | 64% |
| 29 | Maryland | 12679 | 20736 | 64% |
| 30 | Nevada | 7762 | 12672 | 63% |
| 31 | Missouri | 7406 | 12089 | 63% |
| 32 | South Dakota | 412 | 670 | 63% |
| 33 | Iowa | 1911 | 3097 | 62% |
| 34 | Minnesota | 4499 | 7262 | 61% |
| 35 | Michigan | 13534 | 21768 | 61% |
| 36 | Montana | 706 | 1123 | 59% |
| 37 | New Jersey | 18222 | 28712 | 58% |
| 38 | Oregon | 4006 | 6293 | 57% |
| 39 | Idaho | 1420 | 2225 | 57% |
| 40 | Texas | 73562 | 113808 | 55% |
| 41 | Nebraska | 1320 | 2019 | 53% |
| 42 | New Mexico | 2089 | 3188 | 53% |
| 43 | Tennessee | 10671 | 16124 | 51% |
| 44 | New Hampshire | 1302 | 1892 | 45% |
| 45 | Alaska | 539 | 767 | 42% |
| 46 | Hawaii | 1345 | 1841 | 37% |
| 47 | Georgia | 44889 | 60348 | 34% |
| 48 | California | 101615 | 125597 | 24% |
| 49 | Utah | 4704 | 5522 | 17% |
| 50 | Arkansas | 4524 | 5186 | 15% |
| Methodology: Federal Trade Commission data on identity theft reports from Q1 2019 all the way to Q4 2022 were used to compile this report. | ||||
Identity theft reports are split into seven main categories:
- Credit card fraud
- Loan or lease fraud
- Phone or utilities fraud
- Bank fraud
- Employment or tax-related fraud
- Government documents or government benefits fraud
While there’s been a dramatic rise in every category of identity theft fraud since 2019, much of the increase is directly tied to government documents or benefits fraud during the pandemic. According to Consumer Action, criminals used the COVID-19 pandemic to get a hold of people’s personal information and then use it to steal benefits related to unemployment programs, stimulus payments and other newly created government relief efforts.
| ID Category | 2019 Reports | 2022 Reports | % change from 2019-2022 |
|---|---|---|---|
| Credit Card Fraud | 271,943 | 441,822 | 62% |
| Other Identity Theft | 215,908 | 326,590 | 51% |
| Loan or Lease Fraud | 104,778 | 153,547 | 47% |
| Phone or Utilities Fraud | 83,647 | 77,284 | -8% |
| Bank Fraud | 58,857 | 156,099 | 165% |
| Employment or Tax Related | 45,582 | 103,402 | 127% |
| Gov't Doc or Benefits | 23,243 | 57,877 | 149% |
| Methodology: Federal Trade Commission data on identity theft reports from Q1 2019 all the way to Q4 2022 were used to compile this report. | |||
Continue reading for more information on identity theft insurance and what to do if you suspect you may be a victim of identity theft.
Is identity theft insurance worth it?
Identity theft protection insurance is not perfect, but can be a great service if you have the misfortune of having your identity stolen. Without it, getting your credit history back to normal may cost a lot. Statistically, most identity thieves are not caught. This leaves the initiative to protect yourself up to you.
For all the progress that has been made in stopping identity theft, it is still a significant threat. According to Javelin's 2019 Identity Fraud Study, ID theft decreased from 16.7 million in 2017 to 14.4 million in 2018, but out-of-pocket fraud costs to victims more than doubled to $1.7 billion from 2016 to 2018.
As much as the internet age has improved our lives, it has also made the jobs of identity thieves easier. Mobile phone account theft almost doubled from 380,000 cases in 2017 to nearly 680,000 in 2018, according to Javelin’s study. In 2019, Capital One experienced a breach that made 100 million records available to identity thieves. And in 2017, Equifax had a breach involving the data of 147 million people, including Social Security information. It's still considered one of the worst data breaches.
One of the major dangers of identity theft is the scope of its effect. It can affect your ability to get approved for a loan or open a credit line, and bad credit leads to higher insurance rates. Poor credit history can also affect you when you apply for a job or to rent a home.
Overall, given the pervasiveness of identity theft and the long-term financial cost that can come with it, ID theft insurance is a low-cost resource that covers a lot of ground should you have the misfortune of needing it.
“Identity theft insurance is a relatively inexpensive way to take some of the hassles out of restoring your credit if your identity is stolen. At minimum, you should consider a plan that includes credit monitoring, credit restoration expenses and the services of a specialist.” - Rob Bhatt, Insurance Expert
What to do if you're the victim of identity theft
Experts from the Federal Trade Commission and other organizations recommend acting fast when you discover identity theft to minimize the damage. Here’s what you should do if you discover unauthorized use of your personal data.
- Contact the company or organization where the fraud has occurred. Notify them that your identity has been stolen and ask them to freeze your account.
- Contact your identity theft insurance provider, if you have one, to inquire about opening a claim. If the incident is limited to the unauthorized use of your debit or credit card, you may not need to formally open a claim.
- Contact one of the three major credit bureaus to place a fraud alert on your credit file. The credit bureau you contact is required to notify the other two about the alert, which makes it difficult for others to open new accounts with your Social Security number.
- File an identity theft report with the FTC at identitytheft.gov or by phone at (877) 438-4338. The FTC provides a free recovery plan to guide you through the process.
- File a police report. Some companies and organizations require a police report to forgive unauthorized transactions.
- Review your credit report and notify creditors and credit bureaus of unauthorized charges.
- Update the login credentials for your online accounts. Use secure passwords and two-factor authentication. Monitor the accounts for suspicious activity.
- Consider freezing your credit file with all three credit bureaus. A freeze prevents anyone, including you, from opening a new account with your Social Security number. Just remember to unfreeze your credit when you need to open a new account.
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