Identity Theft Insurance | Bankrate

Ariel Skelley/Getty Images

Identity theft is unfortunately common across the U.S. In 2024, the Federal Trade Commission (FTC) reported more than 1.1 million cases of identity theft. And in an era of AI-driven scams, experts expect that number to continue to climb. Some homeowners insurance policies automatically include a level of identity theft protection. If it’s not already part of your policy, you can usually add it as an endorsement.

What is identity theft insurance?

Home insurance can cover identity theft to a certain extent. If your home insurance policy includes identity theft insurance — whether it’s already part of your policy or you paid extra to add it on — it can help with the costs related to restoring your stolen identity. However, it won’t cover direct monetary losses. If, for instance, someone steals your credit card information and goes on a shopping spree, you’d be reimbursed for those fraudulent charges by your credit card company, not your home insurer.

Identity theft often goes far beyond the initial monetary losses. When a fraudster uses your credit card to buy an airline ticket, you can cancel the card and request a new one. Oftentimes, the credit card company will reimburse you for any monetary losses following a short investigation. But other types of identity theft can cause serious (sometimes lasting) damage to your finances and credit rating. In those kinds of cases, you may have to hire an attorney to help restore your credit standing or fight civil judgments resulting from fraudulent accounts opened in your name.

What does identity theft insurance cover?

If your identity is stolen, identity theft insurance can help pay for the following:

• Assistance of a fraud specialist
• Credit monitoring services
• Reimbursement of lost wages caused by taking time off from work to restore your credit or reclaim your identity
• Aiding with civil judgments, criminal charges, audits or hearings related to fraud perpetrated by the “imposter”
• Professional assistance in reclaiming your identity and restoring your credit
• Reimbursement of costs involved in replacing identification documents, such as a driver’s license, passport or Social Security card
• Reimbursement of audit and account application fees
• Reimbursement of attorney’s and court fees associated with civil judgments

Is identity theft insurance worth it?

If your home insurance policy already includes a level of identity theft protection, you probably don’t need to buy any additional coverage. But, if it’s not baked into your coverage, you might consider adding it to your policy. As technology becomes more sophisticated, so too does identity theft. Criminals are using AI-powered tools to crack passwords and breach data. As a result, data breaches increased by 15 percent from 2022 to 2023.

That said, identity theft insurance may not be for everyone. You can take steps on your own to protect your identity, such as setting up randomized passwords and regularly checking your credit report. But, for a nominal additional monthly cost (with many companies), you could feel more at ease knowing your sensitive information is being monitored and help is available in case something goes awry.

Which insurance companies offer identity theft protection?

Most major home insurance companies offer optional identity theft coverage. You may even be able to add identity theft insurance when submitting information for an online quote. According to the Insurance Information Institute (Triple-I), adding this coverage to your existing homeowners policy can cost as little as $25 a year, but can range to more than $500 a year depending on the type and level of identity theft coverage you purchase. The best types of identity theft insurance include reimbursement for fraudulent charges or stolen funds, plus credit monitoring.

Some examples of identity theft coverage offered by national insurers are:

• Allstate Identity Protection
  

  Allstate offers three different tiers of identity theft insurance — Essentials, Premier and Blue — for more customized coverage. Its base policy, Essentials, includes identity monitoring, financial fraud protection, credit checks, and up to $1 million for money taken from your bank account. Individual plans start at around $10 per month, while family plans cost as little as $19 per month.

  Learn more: Allstate insurance review

• Amica identity theft insurance
  

  Amica’s identity fraud coverage pays up to $15,000 in expenses you incur resolving identity theft issues, including legal fees, lost wages and notary fees. Amica also provides policyholders professional identity theft assistance, along with credit monitoring. The company will help you file a police report and affidavits if necessary, and you will receive credit and fraud monitoring for a year if your wallet or handbag is stolen.

  Learn more: Amica Mutual insurance review

• State Farm Identity Restoration
  

  State Farm’s Identity Restoration Insurance reimburses up to $50,000 in necessary expenses related to identity theft restoration, including application fees, attorney’s fees, auditing costs, civil judgments, court costs and credit report fees. You can also add cyber attack and cyber extortion coverage, which pays up to $15,000 in expenses incurred to retrieve your data if a ransomware program hijacks your computer. State Farm advertises that policies start at $25 per year.

  Learn more: State Farm insurance review

• The Hartford Identity Fraud Expense
  

  The Hartford’s optional Identity Fraud Expense Coverage can reimburse you for up to $25,000 worth of expenses related to fraud and identity theft. You can beef up your protection by adding The Hartford’s Identity Restoration Services and ID Hotline coverages, which include fraud specialists services.

  Learn more: The Hartford insurance review

Alternatives to identity theft insurance

Although identity theft insurance can come in handy, it’s not the only option you have to protect yourself. Identity theft insurance can help cover the cost of reclaiming your identity and restoring your credit following a fraud incident. But, there are a couple of things you can do on your own to help prevent identity theft.

Spot identity fraud yourself

By following a few simple steps, you may be able to prevent and identify digital fraud without external assistance. These include regularly checking your financial statements for unauthorized transactions, enabling two-factor authentication for online accounts, and avoiding the sharing of personal information with suspicious parties like scam emails and telephone calls.

Use free resources

To prevent identity fraud, there are a few resources that all consumers can access free of charge. Setting up fraud alerts through any one of the three national credit bureaus (Equifax, Experian and TransUnion), requesting an identity protection PIN from the IRS when filing tax returns and implementing a credit freeze with the major credit bureaus in case of suspected identity theft are some of the ways to prevent and spot suspicious activities associated with online accounts.

Get an identity theft protection service

When you have multiple online accounts, keeping an eye on them can be extremely challenging and time-consuming. Purchasing a cyber identity theft protection service could be very beneficial in such cases. These services monitor your online activities and alert you of suspicious activity associated with your personal information. The most popular cyber protection services include:

• Aura: Aura comes with a large set of tools designed to fight cybercrime. Aura protection includes a password manager, credit inquiry alerts, malware blocking and a virtual private network (VPN).
• Norton LifeLock: This combines antivirus protection along with identity monitoring service. LifeLock alerts you when it detects suspicious activity that may threaten your personal data and reimburses you for up to at least $25,000 in stolen funds, depending on the plan you choose. LifeLock’s service includes Norton antivirus protection along with identity monitoring service. LifeLock alerts you when it detects suspicious activity that may threaten your personal data and offers identity and social security number alerts for all plans.
• Identity Guard: An identity theft protection from IBM, Identity Guard scans the web for your personal information, gives you tools for safe browsing, as well as $1 million in identity theft insurance. You can also monitor your credit activity through all three credit bureaus with its Total and Ultra plans. Cyber protection services can monitor your online activity and alert you of suspicious activity associated with your personal information.
• TransUnion Identity Protection: This service is offered by TransUnion and provides up to $1 million in identity theft insurance. You also get access to various credit tools, including three-bureau credit monitoring, quarterly credit report and score updates, a credit simulator tool and a credit score tracker. The monthly fee also covers dark web monitoring, and you’ll get bank and credit card activity alerts.
• IdentityForce: A top-rated cyber protection service, IdentityForce includes a smart Social Security number tracker, bank and credit card activity alerts, dark web monitoring and $1 million in identity theft insurance. Higher levels of protection include three-bureau credit monitoring, a credit score tracker and credit score simulator.

Frequently asked questions

• How much is identity theft insurance?
  

  The price of identity theft insurance varies by insurer. However, it can range anywhere from $25 a year to more than $500 a year, depending on the extent of coverage you purchase.

• How do I file an identity theft claim?
  

  If you become a victim of identity theft, contact your insurance provider immediately to determine the next steps. Depending on your coverage, your insurance company may reimburse you for out-of-pocket costs like attorney fees or credit restoration. Additionally, regardless of whether you do or do not have identity theft insurance, you may want to contact the Federal Trade Commission (FTC) as soon as possible. If the identity theft occurred online, file a report with the Internet Crime Complaint Center (IC3), the U.S. government’s cybercrime reporting website. Also report the incident to the three major credit rating bureaus

  Beyond that, you may wish to contact your local law enforcement office to obtain an official police report of the incident. A formal police report can offer you protection on both federal and state levels. If an identity thief has damaged your credit score, having an official police report of the incident may greatly assist you in negotiations with creditors to restore your credit score.

• Can I purchase identity theft insurance for my family?
  

  Yes, some insurance companies offer couple and family plans. For example, Geico offers couple plans for $8.99 per month and family plans for $9.99 per month. Allstate Identity Protection offers family plans ranging in price from $18.99 to $36.00 per month. The family plans for Allstate are typically twice the cost of the individual plans, but include coverage for up to 10 members at once.

• How does identity theft happen?
  

  As technology continues to advance, there are numerous ways your identity can be stolen or co-opted. Your identity can be stolen by phone, online, through social media or in person. More specifically, a fraudster can hijack personal information from your mobile device or laptop when you connect to public Wi-Fi or locate identifying information on your social media posts. They can also trick you into disclosing sensitive data via phone or email through “phishing” tactics or steal your card information through a card skimmer hooked up to a payment processing device. Some thieves go as far as digging through trash cans in search of financial statements or stealing wallets or purses to get their hands on your cards and photo ID. 

  Monitoring your credit report and accounts for suspicious activity could help you spot identify theft quickly so you can take immediate action.