Do You Need Identity Theft Insurance?

Recently a new breed of insurance has come onto the scene called identity theft insurance. Basically, identity theft insurance is exactly what it sounds like. Identity theft insurance covers costs associated with dealing with your identity theft problem if your identity is ever stolen. The policies typically cover wages for time lost from work while you straighten out the problem, phone bills, certified mail costs, notary fees, and on occasion attorney fees if they have been pre-approved by the insurer.

The question is whether or not all this is really necessary. Most experts say that it is not, and that it is just another way for insurance companies to take your money. Let's look at why identity theft insurance is probably not necessary.

There is no denying that identity theft is a problem with the number of cases being reported skyrocketing to new highs each year. The vast majority of identity theft cases involve something simple like a stolen credit card rather than a full blown case where someone opens accounts and gets fake identification in your name.

Identity theft insurance will not help protect you from becoming a victim of identity theft. It is much the same as how carrying flood insurance on your home will not stop a flood.

Identity theft insurance covers the expenses involved with dealing with the aftermath of the theft and with getting your life back on track. Typical coverage includes lost wages, phone bills, notary fees, the cost of mailing certified mail and attorney fees, but only with upfront approval from the insurance company.

Taking a closer look at that list, you will see that phone bills are listed, which is really rather meaningless. Just about anyone you will have to talk to when working to restore your identity will have a toll free line, most likely you are not going to be racking up any phone bills. Even if you do have to call someone who does not have a toll free line, odds are that you have access to a cell phone or some sort of freedom calling plan where you do not have to pay extra for long distance calls. If you do incur any expenses at all from using your phone, it is likely to be a very negligible amount.