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Identity theft insurance may be a standalone policy or an add-on with your home insurance. What do these cover? How much do they cost? More inside.
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Identity theft insurance helps reimburse victims of identity theft for eligible losses (such as stolen funds), as well as the costs and expenses associated with recovering their identities.
However, not all identity theft insurance companies provide the same coverage amount or even cover the same types of losses.
If you’re interested in identity theft insurance, you need to know what’s covered, how much you’re covered for, and the process for making claims.
In this guide, we’ll cover what identity theft insurance covers, what it costs, and the pros and cons of some of the most popular identity theft protection and insurance plans available in 2023.
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Identity theft insurance is a type of insurance that offsets out-of-pocket expenses and covers some losses that are incurred as a result of identity theft.
According to the latest data, 65% of all identity theft cases go unresolved [*]. This means you could be stuck footing the bill for a criminal’s actions — unless you have identity theft coverage.
For example, if an identity thief uses your Social Security number (SSN) to take out a loan in your name, you could be left with thousands in debt and a damaged credit score. While you can dispute the fraud, there will still be costs associated with the process — from time spent contacting the credit bureaus to potentially hiring a lawyer.
In most cases, identity theft insurance covers:
Note: Identity theft insurance reimburses victims for their expenses in the identity restoration process. Direct financial losses incurred as a result of the theft are not typically insured unless as the result of an unauthorized electronic funds transfer.
Identity theft insurance offers several benefits, such as covering the direct and indirect expenses associated with recovering from identity theft.
According to some research, it can take an average of 6 months and more than 100–200 hours of work to fully recover from identity theft [*]. During that time, you may miss work, spend money on lawyers or replacing stolen documents and ID, or have to pay for childcare — all out of your own pocket, if you don’t have insurance.
One of the main benefits of identity theft insurance is if it comes as part of an identity theft protection solution.
Along with generous insurance coverage, the best identity theft protection solutions include tools that can proactively protect your identity, warn you if you’re at risk of identity theft, and help you recover from an identity theft event. This includes:
On average, identity theft insurance costs anywhere from $6 to $35 per month — depending on your provider and any additional services included with your plan.
You can get identity theft insurance from your home or renters insurance policy, a dedicated identity theft protection solution, or sometimes even through your bank or credit card company.
Here’s what to expect with each option:
Identity theft insurance can often be purchased as an add on to your homeowners insurance. These plans typically cost anywhere from $8 – $20 per month (on top of the cost of your original insurance plan).
For example, here are some of the costs of identity theft protection from some of the more common homeowners and renters insurance companies:
The bottom line: Adding identity theft insurance to your home’s policy can streamline your bills — however, it may end up costing you more for less coverage (and overall protection).
💡 Related: Is Allstate Identity Protection Worth It? What To Know →
Dedicated identity theft protection companies almost always include identity theft insurance as part of their plans.
Identity theft insurance from identity theft protection companies costs anywhere from $6 to $80+ per month depending on the company, how many people you’re covering, and the additional services.
For example, Aura offers $1 million in insurance coverage per adult member regardless of whether the policy is for an individual, a couple, or a family.
Aura’s identity theft insurance includes:
These companies can also include identity theft protection to monitor your personal information, credit monitoring and fraud alerts with one or all three of the credit bureaus, digital security tools to protect your devices from viruses, hackers, and phishing attacks, as well as identity restoration support.
Here’s how much identity theft insurance costs with the most popular identity theft protection services:
What’s the difference between identity theft protection and identity theft insurance? Identity theft protection encompasses a range of tools to help protect you against the effects of identity theft — including identity theft insurance. While you can sometimes buy standalone identity theft insurance products, it’s almost always a better choice to purchase it bundled with identity theft protection.
📚 Related: Aura vs. LifeLock Comparison: 2024 Showdown →
While most credit cards and banks have customer protections in place to help protect your funds in the case of identity theft or fraud, few offer identity theft insurance coverage or support.
Instead, you’re more likely to use fraud protection services such as zero-liability policies or even the Fair Credit Billing Act (FCBA) — a 1974 federal law that limits consumer liability for credit card fraud to $50 in most cases [*].
The exceptions include companies like:
Protecting yourself with insurance against identity theft entails four simple steps. Here is what you need to do to sign up for your preferred identity theft protection plan.
Research a few different providers and compare their offerings. Learn about each provider’s history and reputation to determine which one provides the right coverage for you and your loved ones.
Some things to consider:
As you research, take note of the amount covered by the insurance policy, what it covers, and any other perks offered before you decide on the best plan.
Some important benefits to look out for include:
📚 Related: Is Zander Identity Theft Protection Worth It? →
You need to sign up for a policy and make your first payment to secure a plan with most standalone identity theft insurance companies. To add the option to your existing insurance policy, you may need to reach out to your insurance broker and request a quote.
With the number of identity theft cases at an all-time high (and increasing every day), comprehensive protection is more vital now than ever before. Get peace of mind with a policy that will protect you and your family from scheming identity thieves.
If you’re looking for an all-in-one security solution, Aura provides a $1,000,000 identity theft insurance policy and stands out with the following distinctions:
📚 Related: The Top 5 Credit Protection Services (How To Choose) →
If you fall victim to identity theft, your identity theft insurance policy will play a key role in the remediation process. The policy will include provisions to file an identity theft report, and you will work with a fraud specialist to get your credit score back on track.
Aura requires that you report fraudulent activity within 90 days of discovering it. Calling our 24/7 direct support line (833-552-2123) is all it takes for you to get started.
After that, you'll receive a claims kit that guides you through the steps you’ll need to take, including instructions and assistance for:
Identity theft insurance policies require documentation from your financial institution that the account is fraudulent or the charges on your credit card are unlawful.
Here’s how the claims process works to obtain documentation:
It can take between 90 days and six months to fully resolve fraudulent activity on your accounts. This is the time that it takes to file your report, send the documentation to the appropriate recipients, and wait to get the fraud removed from your credit report.
While many credit card companies and banks offer some type of protection for their customers, they don’t have specified identity theft insurance policies like those offered by Aura or Allstate.
📚 Related: What Is Credit Protection? Are You Making the Most of It? →
No one identity theft insurance policy can prevent fraud or offer full protection after the fact. However, if any of these instances apply to you, it’s time to start searching for identity theft protection:
With Aura, your accounts will not only be protected and monitored; you'll also have a team of experts in your corner 24/7 — safeguarding you against new threats and ready to assist you in the event of fraud.