Identity Theft and Homeowners Insurance

At California’s Second Annual Identity Theft Summit, California Governor Arnold Schwarzenegger said: “Identity theft is one of the fastest growing crimes in the country…It can happen to anybody…it doesn’t matter how big you are, how little you are, how famous you are, how unknown you are...”

If you have a bank account, credit card, a driver’s license or a social security number, you’re at risk for identity theft. Along with taking steps to protect your personal information, educating yourself about the specifics of your home insurance policy can help protect you against identity thieves.

What is Identity Theft?

Identity theft occurs when someone’s personal data—name, drivers license, social security number, bank account information, etc.—is unlawfully obtained and used for fraudulent or deceptive purposes, usually for financial gain. Thieves use this information to acquire credit cards, access to bank accounts, apply for loans and/or housing, gain employment, and more.

Millions of Victims

The Federal Trade Commission estimates that 9 million Americans fall victim to identity theft each year. The biggest problem with identity theft is that it is anonymous by nature. It’s likely a victim won’t realize their identity has been stolen until they’ve already been hit with fees, or until a creditor calls about an overdue bill. On average, victims of identity theft spend $1,200 in out-of-pocket expenses and 175 hours reversing the damage caused by identity thieves.

Home Insurance and Identity Theft?

A number of home insurance companies cover identity theft as a part of their insurance policy, either as a separate policy or an endorsement. With most policies, this coverage provides the victim reimbursement for expenses lost during the process, including phone bills, lost wages, mailing costs, and pre-approved legal fees. Fraud specialists are provided to walk the victim through the process of restoring their identity.

As with any insurance policy, it is important to shop around for the best identity theft insurance policy as rates and protection levels vary from company to company. According to the Insurance Information Institute, adding an identity theft endorsement to your home or renters insurance policy costs between $25 and $50 annually.

Tips to Prevent Identity Theft

Identity thieves thrive on personal information. Bank statements, credit reports, malicious computer viruses, check stubs or internet searches can provide enough information to steal someone’s identity.

Here are some tips to help protect your identity:

  • Never give personal information to anyone over the telephone.
  • Keep non-essential cards (medical card, identification badges, social security, credit cards) at home.
  • Invest in a locking mailbox. Never send outgoing mail through non-secure mailboxes.
  • Shred all documents that include your name, birth date, or other sensitive information, including junk mail. Determined identity thieves will often rummage through garbage cans to obtain discarded mail.
  • Make sure you have firewall, anti-spyware and anti-virus programs installed on your computer.
  • Check your credit report periodically. Consumers are entitled to one free credit report per year from each of the three major credit bureaus—Equifax (www.equifax.com), Experian (www.experian.com), and TransUnion (www.transunion.com).

If you suspect your identity has been stolen, it is critical that you contact your bank and credit card companies immediately. These financial institutions should be able to help you with alerting the credit bureaus and directing you to the appropriate resources. Protect your Social Security number by calling the Social Security Fraud Hotline at: 1-800-269-0271. A valuable source of information during this time is the FTC Identity Theft Hotline at: 1-877-IDTHEFT.