Identity Theft: What's Covered in Your Homeowners Policy?

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Identity Theft: What's Covered in Your Homeowners Policy?

Imagine this. You go to file your tax returns, hit submit, and then get a notification saying "your tax returns have already been received." What?! You have just experienced identity theft. It can happen to anyone at any age. Hacking methods are getting more sophisticated as we approach the year 2020. Data breaches at the enterprise level are too common, but it can also happen to your personal accounts. Lucky for you, homeowners insurance can offer a form of coverage in this scenario: identity theft coverage.

Frequency Rising

In the US there has been 18.7 million victims of identity theft. In 2017 alone, 2 million people were compromised suffering losses of $16.8 billion. It takes an average of 330 hours to repair the damage left by identity theft. Getting back on your feet isn't easy:

  • 72% have difficulties getting the negative information off of their credit and personal records.
  • 50% of people have trouble getting loans or credit cards after having their identity stolen because of this.
  • 20% have increased credit card rates.

The most common channel of attack is through financial identity theft.

  1. Tax fraud (as we saw in the beginning)
  2. Checking and savings account fraud
  3. Mortgage fraud
  4. Investment account fraud
  5. Credit/Debit card fraud

In terms of geographic area, those living in Florida and Arizona (top retirement states) are more prone to getting their identity stolen. Although age is a significant factor of this, identity theft usually happens to children and elders. Florida is one of the top places due to 30% of their population being under 10 and over 65. 

Am I covered?

This is a question you should ask yourself before the scenario happens. The answer depends on your homeowners insurance company. You usually need to buy an endorsement as an add-on to your insurance. The cost is usually $25-$60 per year and has $10,000-$15,000 in coverage. The main focus of insurance companies after identity theft is recovery and restoration. Some companies will assign you a case manager who will help guide you in dealing with the credit bureaus and consumer financial companies. They basically do all the legal work so you don’t have to.

What is not covered?

Identity theft protection under your homeowners insurance does not cover your monetary losses. If someone else filed your tax return in your name and got your $5,000 refund check, you aren't getting that $5,000 back. Or at least not from your insurance company. 

Getting your identity stolen is a traumatic experience. Your life is flipped upside down. Purchasing identity theft coverage beforehand could save you a lot of headaches with the legal cleanup after an attack, but it won't make you whole on monetary loss from the incident. Make sure you contact your homeowners agent to get the correct information on coverage and how this matter will be handled. 

Hope that helps!

At your service,
Young Alfred