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What Is Identity Theft Insurance? Do You Really Need It?

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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      Is It Worth It To Get Identity Theft Insurance?

      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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      What Does Identity Theft Insurance Cover? Why Do You Need It?

      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:

      • Lost wage reimbursement. Identity theft insurance typically covers some or all of the wages you lose by taking time off work to resolve issues dealing with identity theft (up to 12 months after your identity is stolen).
      • Notary fees. Your policy will also cover fees associated with verifying important documents or notarizing affidavits through a notary service.
      • Mailing costs. Identity theft insurance covers costs associated with shipping documents related to your case, such as tracking, postage, and envelopes.
      • Phone bills. The costs of long distance phone calls or text messages incurred as a result of identity theft are covered.
      • Child, spousal, and elderly care. Any care costs (incurred by time spent resolving your identity theft issues) can be covered.
      • Credit monitoring services. Your insurance will cover costs for requesting credit reports or enacting a credit freeze or thaw.  
      • Legal fees. You'll also get help with attorney fees, transcript costs, appeal bonds, court filing fees, and expert witnesses or courier fees. Plus, you will be covered for any fees brought against you by a creditor or collection agency.
      • Public records searches. Your policy will cover any costs associated with scouring public documents. Private investigator fees are also included, but your insurer will have to approve this first.
      • Loan reapplication fees. You are covered for costs incurred for re-filling applications for loans, grants, or other previously denied credit as a result of identity fraud.
      • Dark Web searches. Performing a Dark Web search — to ensure that your personally identifiable information (PII) is not compromised — is also covered.
      • Replacing identification documents. The insurance company will cover the costs of replacing ID cards, driver’s licenses, and passports.

      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.

      🛡 Get top–rated protection with $1 million in coverage. Every adult member on one of Aura’s award-winning identity theft protection plans is covered for up to $1 million in eligible losses. Try Aura free for 14 days and get covered today.

      What Are The Main Benefits Of Identity Theft Insurance?

      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:

      • 24/7 White Glove Fraud Resolution Support. Dealing with identity theft can be a lengthy and frustrating process. Many services include 24/7 access to specialists who can provide hands-on help recovering from fraud or ID theft.
      • Identity theft monitoring and protection. These tools help proactively prevent identity theft by monitoring your most sensitive personal and financial information across the Dark Web, public forums, data breaches, and more, and alerting you to suspicious activity or signs of fraud.
      • Three-bureau credit monitoring and fraud alerts. Identity thieves may open new accounts or take out loans in your name. These tools can warn you if this sort of activity shows up on your credit reports.
      • Digital security tools. Today, most identity theft happens online. Many modern tools include protection against hackers, viruses, and online scams. This includes antivirus software, virtual private networks (VPN) to hide your browsing history, social media monitoring, and more.

      How Much Does Identity Theft Insurance Cost?

      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:

      Homeowner or renters insurance policies

      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:

      • Allstate: $9.99-$17.99 per month
      • State Farm: $25 per year
      • Geico: $7.99-9.99 per month

      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

      🏆 Try Aura’s award-winning identity theft protection for free.Aura’s all-in-one solution has been rated #1 by Money.com, Forbes, TechRadar, and more. Try Aura for free and get the protection you need.

      Identity theft protection services

      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:

      • Aggregate limit of insurance: $1,000,000 per policy period
      • Lost wages: $2,000 per week, for a maximum of five weeks
      • Travel expenses: $1,000 per policy period
      • Eldercare, spousal care, and child care: $2,000 per policy period
      • Certified public accountant costs: $1,000 per policy period

      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:

      Company
      Cost
      Identity Theft Coverage
      Aura
      Starts at $6 per month (using this special discount link)
      $1 – $5 million
      LifeLock
      $8.29 – $40.99 per month
      $1,050,000 – $3 million
      Identity Guard
      $8.99 – $29.99 per month
      $1 million
      IdentityForce
      $17.95 – $23.95 per month
      $1 million
      ID Shield
      $14.95 – $79.95 per month
      $1 million
      PrivacyGuard
      $9.99 – $24.99 per month
      $1 million

      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: 2023 Showdown

      Credit card companies and banks

      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:

      • Discover — offers a dedicated identity theft protection solution that includes up to $1 million in identity theft insurance for $15 per month per user.
      • Wells Fargo — sells identity theft protection that includes up to $10,000 in identity theft insurance for $15.99 per month.

      How To Sign Up for Identity Theft Insurance

      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.

      1. Find a provider

      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:

      • See if your homeowners insurance offers identity theft insurance. Sometimes the easiest or cheapest option can be bundling with your existing insurance.
      • Check if identity theft protection is already included in your home insurance. Some insurance policies may already come with this option; if so, you don’t need to worry about signing up for anything else.
      • Buy an identity theft insurance policy from a company that specializes in identity theft. Companies such as Aura provide identity theft insurance as a specialist policy, ensuring that you get the best care.
      • Understand how you will interact with the company. Do they have 24/7 customer service and a robust online suite of digital security tools? Specialist providers like Aura make it simple to find and manage your insurance policy online.
      🥇 Don’t settle for second-best protection. Aura’s all-in-one identity theft protection solution has been rated #1 by Money.com, Forbes, USA Today, and more. Try Aura free for 14 days and protect yourself from scammers.

      2. Select a plan

      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:

      • Low or no deductibles, high coverage amount
      • No out-of-pocket expenses in the remediation process
      • Affordable cost (no more than $15–20 per month for each person covered)
      • Credit monitoring from all three major credit bureaus (Equifax, Experian, and TransUnion)
      • Additional features like credit protection, data breach notifications, and restoration services

      📚 Related: Is Zander Identity Theft Protection Worth It?

      3. Sign up or request a quote

      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.

      4. Get protection

      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:

      • The industry’s fastest fraud alerts (up to 250x faster than competitors) [3]
      • The highest-rated identity monitoring and protection — covering your personal information, credit cards, Social Security number (SSN), home title, bank accounts, and more [5]
      • Three-bureau credit monitoring with a one-click credit lock for your Experian credit file
      • Proactive identity theft protection features like a password manager and auto-updating of compromised passwords
      • Device and network protection with advanced antivirus software and a military-grade virtual private network (VPN)

      📚 Related: The Top 5 Credit Protection Services (How To Choose)

      How Does Identity Theft Insurance Work? How To File a Claim

      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:

      • Notifying all credit bureaus of the fraud
      • Filing a police report with details of the fraudulent activity
      • Using the Federal Trade Commission’s (FTC) Identity Theft Hotline
      • Filing for specific benefits outlined in your insurance policy

      What documents do you need?

      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:

      1. File a police report. Call your local police department to notify them about the fraud. Share a copy of your credit report after you black out items not related to identity theft. Request a copy of the police report and additional forms to solicit account information from creditors or your phone carrier.
      2. Send the police report to your financial institution. This proves to the company that the account is fraudulent. The security or fraud departments there will create documents that you can submit to collections departments, credit bureaus, and others to aid in your recovery.
      3. Send the documentation to your insurance policy provider. This documentation will also be used to access your insurance policy and its benefits, ensuring that you do not suffer any additional financial losses while repairing your credit.

      How much time does fraud resolution take?

      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.

      Do banks offer identity theft insurance?

      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?

      Do You Need Identity Theft Insurance? Here’s How To Know

      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:

      • You feel that you and your family may be at risk.
      • You’ve previously been a victim of identity theft.
      • You don’t have the time to monitor your credit on your own.
      • You want to protect major assets.
      • You’ve already experienced a personal data breach.

      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.

      Keep your credit and identity safe from scammers. Try Aura free for 14 days.

      Award-winning identity theft protection with AI-powered digital security tools, 24/7 White Glove support, and more. Try Aura for free.

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