We’ll be honest. We’ve always thought of identity theft as a risk so far-fetched that it could never happen to us. But a little research on the topic revealed that identity theft is a serious threat to consumers and it can happen to anyone.
Identity theft today
Identity theft resulted in consumer losses of $14.4 million, according to the 2019 Identity Fraud Study by Javelin Strategy & Research. The same report states more victims are paying out of pocket for these crimes too. While old-school identity theft still occurs in a variety of ways, from stealing wallets and mail to forging change-of-address forms and dumpster diving for discarded personal data, the most common way it occurs today is digitally.
In today’s digital age, we share more of ourselves on the internet than ever before. Many of us type personal information like our social security number, address, or credit card number into a website daily without a second thought.
When security fails
What happens when cybersecurity fails and identity thieves gain unfettered access to our information? When someone steals your identity, they can wrack up thousands of dollars of debt in your name and cripple your credit score, which could lead to being denied a loan, mortgage, or even employment through no fault of your own. Are you prepared for that?
To demystify the whys and hows of identity theft insurance, we spoke with insurance expert and Air Force veteran Don Clark of Carlisle Insurance. Here’s what we learned:
MFM: How does identity theft insurance work? What might it cover?
Clark: Identity theft insurance covers expenses incurred to restore your identity. Although policies vary, typically you’d be covered for out-of-pocket expenses directly associated with reclaiming your identity. This could include postage, notary cost, copying, lost wages, and legal fees. Some policies could also cover the cost to monitor credit for future signs of identity theft. Many companies offer identity theft policies and those policies can/will vary from carrier to carrier. Some homeowner policies will have an identity theft endorsement included in their policy, so be sure to check that out before purchasing a stand-alone policy.
MFM: What would you say are the pros and cons?
Clark: Since the coronavirus pandemic swept the globe, there has been a drastic rise in identity theft and fraud as scammers attempt to exploit the situation. These thieves will attempt to obtain your information through scams such as phishing, impersonation of financial institutions, health insurance carriers, or medical relief companies. Most notably they are seen impersonating a co-worker or office email as a technique to obtain the desired information. Use your gut; if the email smells funny it’s probably a phish.
MFM: Is this something you would recommend to anyone, or are there certain careers/situations you would more highly recommend it for?
Clark: I would highly recommend identity theft insurance to any and everyone. The cost is minimal but the protections afforded are substantial. Most companies are going to include a “how-to” guide that will really help the insured take the appropriate steps to protect themselves and their family from identity theft. Identity thieves are not picky, they just want to aggregate the information. It’s the old “throw it against the wall and see what sticks” theory.
MFM: As an Air Force veteran, do you think there any aspects of identity theft that are particularly pertinent to active-duty service members, veterans, and their families?
Clark: Although I do not feel that military families are more targeted than others per se, I would encourage those military members that are deployed to ensure that they have a policy in place. Not all countries take cybersecurity as seriously and, considering the many channels that are required to communicate with loved ones from abroad, the opportunity for malfeasance is greater.
MFM: What are some things about this insurance that might surprise people?
Clark: There are good and bad parts. Good — inexpensive, different levels of coverage, reimburse you for expenses. Bad — it doesn’t replace items that may have been stolen such as cash from a bank account or money from a 401k. I believe everyone should have some level of coverage; what that level is depends on the individual family.