Better Business Bureau offers identity theft tips

Identity theft is a hot topic today as news stories regularly profile victims who are struggling to recover from its devastating impact. This is helping more consumers to recognize they need to take preventive measures to better safeguard their personal information and, hopefully, lessen their risk of falling victim. And, judging by the calls received by Better Business Bureaus, it is leading some consumers to question whether they should also purchase protection in case they do fall victim.

Consumers are asking about advertisements by organizations and businesses that offer identity theft insurance, forms, services or other protection for a fee. They want to know how to evaluate the various services and what factors to consider when making a purchasing decision.

Identity theft insurance provides reimbursement to crime victims for the cost of restoring their identity and repairing credit reports. This would include expenses such as phone bills, lost wages for time taken from work to deal with the fraud, notary expenses, loan reapplication fees, certified mailing costs and sometimes attorney fees, with the prior consent of the insurer.

Some insurance companies now include identity theft insurance as part of their homeowners’ insurance policy. Others sell it as either a stand-alone policy or as an endorsement or rider to a homeowner’s or renter’s insurance policy. According to the Insurance Information Institute, these policies cost, on average, between $25 and $50 for $15,000 to $25,000 worth of coverage.

Whether to purchase identity theft insurance is a personal decision. Keep in mind that whether insured or not, victims are usually not held responsible for fraudulent charges incurred by identity thieves. It is out-of-pocket losses that can be a consideration. A new survey conducted for Nationwide Mutual Insurance, which focused on 10 metropolitan areas, found 10 theft victims paid an average of $587 in out-of-pocket charges for legal fees, copying charges, telephone calls and lost wages. The 2005 Identity Fraud Survey Report, released by Javelin Strategy & Research and the BBB, found that while the median value of identity fraud crimes is $750, most identity fraud victims incurred no out-of-pocket costs. However, the average victim spent 28 hours trying to “restore” his or her credit record.

If you decide in favor of purchasing insurance against identity theft, the BBB suggests the following:

Check first with your insurance agent or your homeowners’ insurance company to find out if they offer identity theft insurance. Ask what they would recommend for your situation.

Be cautious before investing money in a new product being offered by an unknown company. Make sure you are dealing with a reputable organization. Contact the BBB for a reliability report, or visit

Ask about the deductible; coverage limits (some policies place a dollar limit on retaining legal assistance or on the amount of lost wages that will be covered); and any restrictions on how the money for expenses is to be spent.

Have a clear understanding of the services and assistance you would receive in the event of an identity theft when comparing product costs. For instance, some third-party insurers reimburse out-of-pocket costs, as well as offer investigators to help victims wend their way through the process of working with creditors, law enforcement, credit bureaus and the like.

If you decide to purchase insurance, do not diminish your effort to prevent identity theft! The BBB offers suggestions at about how to safeguard your personal information.

From the Dec. 28, 2005-Jan. 3, 2006, issue

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