2024 Guide to Identity Theft Insurance

Insurance is something we hope we never need but it’s there to save us during our most stressful times. And identity theft insurance is no different. We’ve surveyed identity theft victims, and one thing they all have in common is how difficult the experience was personally. Identity theft insurance can help alleviate those issues by providing the funds needed to restore your identity.

>> Read More: A 2024 Guide to Identity Theft Protection

But, is the price worth it or is buying identity theft insurance more like buying car insurance from the used car place that changes the name of their dealership every other year? We researched to find out and came up with mixed results. Whether or not it’s worth it depends on your circumstances and the company you choose as your insurer. Let’s dig in.

Key Findings

• Identity theft insurance does not normally cover stolen funds or personal expenses. It covers costs associated with recovering your identity.
• The price of identity theft insurance starts at under ten dollars per month.
• Most identity theft insurance providers help you recover your identity with professional support as well.
• Signing up for identity theft insurance can put your data at risk if they have poor data security practices.

What is Identity Theft Insurance?

At first, you probably thought identity theft insurance would cover the money you lose due to identity theft. But, that’s not usually the case. Identity theft insurance tends to cover the costs you incur while recovering from identity theft. It does not cover funds that identity thieves steal directly from you.

To stand out in the competition, some providers connect you with an identity theft specialist as well. That way you get the money you need to recover your identity and the advice of an expert to guide you the whole way. This is one of the reasons when we tested Aura, it ended up on our list of the best identity theft protection services.

What Does Identity Theft Insurance Cover?

Since identity theft insurance doesn’t tend to cover your losses caused by identity theft, what exactly does it cover? That’s going to depend on the company you choose to insure you. But, the most common expenses that identity theft insurance covers include:

• Case manager fees
• Legal fees
• Document replacement fees
• Loss of income reimbursement
• Financial activity fees
• Child care for court hearings and necessary appointments

Our favorite identity theft restoration services offer coverage beyond these industry standards with stolen funds reimbursement and personal expense compensation. They also add proactive measures like monitoring your credit reports from one or all three bureaus, financial fraud alerts, and device protections like antivirus software. We find these features are worth the premium as we’ve received over 25 fraud alerts during our time testing identity protection services.

How Much Does Identity Theft Insurance Cost?

Identity theft insurance is nowhere near the price of insurance we’re used to paying like car insurance or health insurance. Instead of several hundred per month, identity theft insurance starts at about ten dollars per month for one of the best family identity theft protection services. That’s right, ten dollars for your whole family.

>> Learn About: Identity Theft Prevention: Tips and Techniques for 2024

To give you a better idea of the price of identity theft insurance, we compared our four favorite providers:

Pros and Cons of Identity Theft Insurance

The pros and cons of identity theft insurance are amplified by the quality of the provider. So, even though all of them have these pros and cons, the high-quality ones take measures to reduce the impact of the cons while making the pros more significant. Let’s go over both starting with the pros.

Pros of Identity Theft Insurance

Here’s what you can expect to get from a quality identity theft insurance provider:

• Professional support recovering your identity — To help you recover in the most efficient way, many providers offer one-on-one guidance from an identity recovery specialist.
• Coverage for costs incurred during recovery — Given that the majority of Americans would not be able to cover a $1,000 emergency expense, the fees you’ll incur recovering your identity can get a lot higher than that.1 And these are fees you can’t get around paying or you can risk further damage to your identity. Insurance resolves this issue.
• Proactive identity protection — Insurance companies don’t want to pay out so identity insurance providers typically offer proactive protection as well. Keeping you safe helps them too.

>> Read More: How To Protect Yourself From Identity Theft

• Credit monitoring and reports — The most common type of identity theft involves the thief trying to open up a new credit card account. This shows up on credit reports, so if you have monitoring, the activity should get flagged before the thief can take out significant loans.

Cons of Identity Theft Insurance

There are a few drawbacks to identity theft insurance. As long as you pick one with a good reputation though, these cons are minimal.

• Data risks — Signing up for identity theft insurance means providing your personal information to the provider. If they experience a data breach, that could mean your data getting leaked.

• Overlapping coverage or features — You might already have identity coverage through a credit card or other insurance provider. A lot of identity theft insurance providers also bundle their services with credit monitoring, antivirus software, and VPNs. If you’re like us, you don’t like paying two companies for the same service.
• Protection is not 100 percent effective — No matter what you do to reduce your risk of becoming an identity theft victim, the risk never goes away completely.

Final Thoughts: Is Identity Theft Insurance Right for You?

Now comes the real question. Is identity theft insurance right for you? Well, that depends on your circumstances. If you already have identity protection through your credit card or other insurance company, you might not need it. Especially if you keep your identity theft risks low by keeping your important documents and devices secure.

We tend to recommend identity theft insurance though. At prices starting at under ten dollars per month for the best providers on the market, it’s hard to pass up the protection. Check out our guide on comparing identity protection services to figure out which one is right for you.