As identity theft has become one of the most prevalent crimes in the world, insurance companies have increasingly marketed identity theft insurance policies to potential victims.  In fact, consumers see advertisements on a daily basis from insurance companies offering protection against losses sustained as a result of identity theft. 

Yet, as with many products and services purportedly designed to assist victims of identity theft – including credit monitoring services – consumers need to carefully investigate individual identity theft insurance products and determine if the insurance would actually cover the types of losses the consumer is most likely to incur.

Just as the number of insurance companies offering identity theft insurance is growing, so is the debate concerning whether identity theft insurance is of any real value to consumers.

Proponents of identity theft insurance argue that it can’t hurt to be covered in as many ways as possible given the statistical likelihood that everyone will be a victim of identity theft at some point in their lifetime – with many being victimized more than once.

Critics of identity theft insurance believe the overwhelming majority of identity theft victims will never suffer financial losses severe enough to warrant insurance as most credit card companies, banks and other financial institutions will reimburse customers harmed by financial fraud.

Additionally, a significant number of consumers are not aware that they currently have identity theft insurance coverage as part of existing insurance policies (homeowners or automobile) or with their credit card account.  Also, most credit monitoring services include identity theft insurance as well.

Before initiating any identity theft insurance policy, determine if you already have coverage from an existing insurance policy, credit card or credit monitoring service.  Even if you do not have identity theft insurance, be sure that any policy you are considering actually covers the types of losses you will incur above any deductible mandated by the policy.  While many policies are relatively inexpensive, the terms of coverage may be of little use when an identity thief steals your identity.

Finally, as with all types of insurance, read the identity theft insurance policy closely to determine if it is appropriate for you and your family and if necessary seek the professional guidance of an independent insurance professional.