Should You Get An Identity Theft Insurance Coverage?

In the recent years, there was a drop in cases of identity theft among Americans (from over 10 million in 2003 to 9 million for 2006), a considerable market still exists for identity theft insurance coverage. Part of the reason is the many horror stories played up in the media, but it is also partly because identity theft insurance costs are very low. Many find it better to purchase a $25 identity theft insurance coverage than to have to worry about the penalty of a progressively more electronically driven lifestyle. So many companies like MetLife Auto & Home, American International Group, etc. offer an identity theft insurance coverage.

Aside from $25 policies (which offer $15,000 worth of coverage), these companies also offer $50-$60 polices that is worth around $25,000. All of these have combined to make identity theft insurance coverage the fastest growing insurance product in recent years. But experts suggest that in case you do want one, that your identity theft insurance plan, should only be a rider on your existing policy, so it’s best to check with your existing insurance company first.

But do you really need identity theft insurance?

If you ask insurance companies, the answer will be a resounding yes and they usually ensure that all your doubts will be put to rest.  What you do not hear often is why you wouldn’t need it.

Identity Theft Insurance – Why Experts Say You May Not Need It?

Identity theft insurance coverage is intended to pay for the cost of fixing your credit standing in case of identity theft including payment for notary costs, telephone bills, mailing expenses, lost wages, loan re-application fees  and other legal fees.  Experts offer five reasons why you don’t need this type of insurance.
1.    Complacency – the assurance of the insurance makes one complacent and thus increases the risk of being a victim.
2.    Compared to the risks involved, even the low costs seem to be of poor value.
3.    If proven, your bank, credit card provider will more likely cover any losses as a direct result of identity theft.
4.    As it will not fix poor credit scores or erase any criminal record generated by the theft, you can’t really count it as real insurance.
5.    Despite of paying for it, you still have to go through the arduous process of fixing the problem yourself.

Yes, identity theft cases are going up but the odds of getting victimized is not worth the cost, some statisticians say plus the FTC confirms that less than half the victims spend more than $1000 to fix the problem.  There is only one thing that the American insurance industry and critics of identity theft insurance coverage agrees on and that is the best insurance is still prevention.