How to Get Identity Theft Insurance and Recover from Fraud
Identity theft is a serious crime that can have devastating consequences for your finances, credit, and reputation. Identity theft occurs when someone uses your personal information, such as your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes. According to the Federal Trade Commission (FTC), identity theft affected more than 1.4 million Americans in 2021. Some of the common types of identity theft include:
- Credit card fraud: Someone uses your credit card or credit card number to make unauthorized purchases.
- Bank account fraud: Someone accesses your bank account and withdraws money, writes checks, or transfers funds.
- Tax-related fraud: Someone uses your Social Security number to file a tax return and claim a refund or a job.
- Medical identity theft: Someone uses your health insurance or medical information to get medical services or prescriptions.
- Child identity theft: Someone uses your child’s Social Security number to open accounts, apply for benefits, or commit other fraud.
Identity theft can cause you to lose money, incur debt, damage your credit score, and face legal problems. It can also take a lot of time and effort to restore your identity and clear your name. That’s why it’s important to protect yourself from identity theft and know what to do if it happens to you. In this article, we will explain how identity theft insurance can help you recover from identity theft and what steps you need to take to resolve the issue.
What is identity theft insurance?
Identity theft insurance is a type of coverage that can help you pay for the expenses associated with restoring your identity after a fraud. Identity theft insurance does not prevent identity theft from happening, nor does it reimburse you for the money that was stolen from you. Rather, it covers the out-of-pocket costs that you may incur while resolving the problem, such as:
- Legal fees
- Lost wages
- Notary fees
- Credit report fees
- Postage and phone bills
- Child care costs
The amount of coverage and the types of expenses that are covered vary by policy. Some policies may also offer additional services, such as:
- Credit or identity monitoring: These services alert you to any suspicious activity on your credit reports or personal information databases.
- Identity restoration: These services provide you with a fraud specialist who can help you contact creditors, place fraud alerts, file affidavits, and replace lost documents.
- Personal cyber coverage: These services help you prevent or recover from cyberattacks that may compromise your data or devices.
- Reimbursement for stolen funds: Some policies may also cover the money that was taken from your accounts as a result of fraud.
You can get identity theft insurance either as a standalone policy or as an add-on to your homeowners, renters, or other insurance policy. The cost of identity theft insurance typically ranges from $25 to $60 per year. You should read the policy carefully or talk to an agent to understand what is and isn’t included, what the coverage limits are, and whether a deductible applies.
How to recover from identity theft?
If you suspect that someone has stolen your identity, you should act quickly to limit the damage and protect yourself from further harm. Here are some steps you need to take to recover from identity theft:
Step 1: Contact the companies where the fraud occurred
The first thing you should do is contact the companies where you know or believe the fraud took place. For example, if someone used your credit card without your permission, you should call your credit card issuer and report the unauthorized charges. You should also close or freeze any accounts that were opened or tampered with in your name. Ask the companies to send you confirmation letters or emails that show that they have removed the fraudulent transactions or accounts from your records.
Step 2: Place a fraud alert on your credit reports
The next thing you should do is place a fraud alert on your credit reports. A fraud alert tells businesses that they must verify your identity before they issue credit in your name. This makes it harder for someone else to open new accounts using your information. You can place a free fraud alert on your credit reports by contacting one of the three major credit bureaus: Equifax, Experian, or TransUnion. You only need to contact one of them; they will notify the other two. There are different types of fraud alerts that you can choose from:
- An initial fraud alert lasts for one year and is suitable if you think someone may have stolen your identity.
- An extended fraud alert lasts for seven years and is suitable if you have evidence that someone has stolen your identity.
- An active duty alert lasts for one year and is suitable if you are in the military and deployed.
You can renew or remove a fraud alert at any time. You can also request a free copy of your credit report from each of the credit bureaus once you place a fraud alert.
Step 3: Report identity theft to the FTC
The third thing you should do is report identity theft to the Federal Trade Commission (FTC). The FTC is the government agency that helps consumers deal with identity theft and other consumer issues. You can report identity theft to the FTC by visiting IdentityTheft.gov. On this website, you can:
- Answer questions about what happened to you
- Enter your name, address, and other information
- Get your Identity Theft Report
- Get a recovery plan customized for your situation
Your Identity Theft Report is a document that proves that you are a victim of identity theft. It also lists the accounts and transactions that are fraudulent and need to be removed or corrected. You can use your Identity Theft Report to dispute errors on your credit reports, stop collection calls, and prevent further fraud.
You can also create an account on IdentityTheft.gov to track your progress and update your information. You should keep copies of all the documents and records related to your identity theft case, such as letters, emails, receipts, and statements.
Step 4: File a police report
The fourth thing you should do is file a police report with your local law enforcement agency. A police report can help you prove that you are a victim of identity theft and support your claims with creditors and other entities. To file a police report, you will need to bring:
- Your Identity Theft Report from the FTC
- A government-issued photo ID
- Proof of your address, such as a utility bill or lease agreement
- Any other evidence of identity theft, such as letters, emails, or statements
You should ask the police to give you a copy of the report or the report number. You should also keep the contact information of the officer who took your report. You may need to follow up with the police if they have any questions or updates about your case.
Step 5: Repair your credit and monitor your accounts
The fifth thing you should do is repair your credit and monitor your accounts for any signs of identity theft. To repair your credit, you should:
- Review your credit reports from all three credit bureaus and identify any errors or discrepancies.
- Dispute any inaccurate or fraudulent information on your credit reports with the credit bureaus and the companies that provided the information.
- Follow up with the credit bureaus and the companies until the errors are corrected or removed.
- Consider adding a statement to your credit reports explaining that you are a victim of identity theft.
To monitor your accounts, you should:
- Check your bank accounts, credit card statements, and other financial statements regularly for any unauthorized or suspicious activity.
- Change your passwords, PINs, and security questions for all your online accounts.
- Use strong and unique passwords for each account and avoid using personal information that can be easily guessed or found online.
- Enable two-factor authentication or other security features for your accounts whenever possible.
- Be wary of any emails, phone calls, or messages that ask for your personal or financial information or ask you to click on links or open attachments.
- Avoid sharing your personal or financial information with anyone you don’t know or trust.
Identity theft is a serious crime that can have lasting effects on your finances, credit, and reputation. If you are a victim of identity theft, you should act quickly to limit the damage and protect yourself from further harm. You should also consider getting identity theft insurance to help you cover the expenses associated with restoring your identity. Identity theft insurance can reimburse you for legal fees, lost wages, notary fees, and other costs that you may incur while resolving the issue.