Denn Cautions Delawareans To Scrutinize Identity Theft Insurance 

 

Consumers Urged To Carefully Consider Costs And Benefits Before Purchasing New Type Of Insurance

Dover – Insurance Commissioner Matt Denn is alerting consumers to the fact that some insurance companies are now offering insurance against identity theft, but that consumers should be aware of what they are getting – and what they are not getting – before purchasing such a policy.

Identity theft occurs when a person uses your personal information, such as Social Security number and date of birth, with the intent to commit fraud or to aid an unlawful activity. Once personal information is obtained, the person may open new credit card accounts in your name, open bank accounts in your name to write bad checks or take out a loan in your name.

Federal law already provides a $50 liability limit for the fraudulent use of credit cards. Because of this, most identity theft victims never incur a high amount of direct monetary losses, Commissioner Denn said.

As a result of the increasing prevalence of identity theft, several companies are now offering identity theft insurance, which generally costs between $25 and $60 per year.

“Identity theft insurance cannot protect you from becoming a victim of identity theft and does not cover direct monetary losses incurred as result of identity theft,” Commissioner Denn said. “Instead, identity theft insurance provides coverage for the cost of reclaiming your financial identity, such as the costs of making phone calls, making copies, mailing documents, taking time off from work without pay and hiring an attorney.”

Commissioner Denn suggested consumers to consider the following points if they are thinking of purchasing an identity theft policy:

§         Remember, identity theft insurance almost always does not cover direct monetary losses.

§         Find out what the policy limits are. Most identity theft insurance policies have policy limits of $10,000 - $15,000.

§         Find out if there is a deductible. Some policies require you to pay the first $100 - $500 of costs incurred for reclaiming your financial identity.

§         If the policy covers lost wages, verify what limits apply and what is required to trigger this coverage. If you are a salaried employee or are required to request vacation time in the event of a work absence associated with reclaiming your financial identity, you may not have unpaid leave and lost wages.

§         If the policy covers legal fees, verify what limits apply and if legal work needs to be pre-approved by the insurer.

§         Check to see if your current homeowner insurer includes identity theft insurance as part of your homeowner’s insurance. If not, you may be able to add identity theft insurance to your homeowner’s policy for a small fee or purchase a stand-alone policy from another insurer, bank or credit card company.

“If you still believe that identity theft insurance is a good deal for you, make sure you understand what you are purchasing and compare the product’s price, coverage and deductibles among a number of companies,” Commissioner Denn said.

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