Identity theft can do a lot of damage from which it can take months, or even years, to recover. Becoming a victim of identity theft fraud impacts your financial health, credit standing, and perhaps your employment prospects if a problem shows up on your credit report.
Identify theft is a serious problem that affects millions of Americans. According to a 2017 survey, 41 million adults in the U.S. alone have had their identities stolen. If these numbers scare you and you worry about what identity theft can do to your life, it's time to take action. You can begin by looking into the protection that identity theft insurance offers.
Havoc Credit Card Fraud Causes
If an identity thief steals your credit card account information, you can find yourself with a lower credit score and trouble qualifying for new lines of credit, including auto and home loans. Even if you aren't denied credit, it's going to cost you more if a lender charges you a higher interest rate on a loan because of poor credit.
An identity thief can apply for multiple credit cards using your name and Social Security number and then max out the cards. As a result, your credit score can take a hard hit, as your credit utilization ratio rises.
Damaged credit can keep you from renting an apartment or qualifying for financial aid to attend college. A low credit score can also increase your auto insurance rates or lead to collection agencies threatening lawsuits and garnished wages.
When an identity thief uses your identity to conduct illegal activities, you may find clearing your name and the public record to be expensive. Fortunately, identity theft insurance coverage can help reimburse the costs of recovering your credit and your good name.
Protection Insurers Offer
Most credit card companies only hold you responsible for a stated amount of fraudulent or unauthorized charges on your credit card account, providing you report the card as missing or stolen. Your home insurance or renters' policy is your next line of defense. Insurers often offer policyholders the option of buying this extra coverage as an endorsement on their standard home insurance policy.
Coverage terms and services vary by insurer and state, but policies often provide reimbursement of attorney fees, administrative fees, and other related expenses. The insurer may assign a consumer fraud specialist to your case who can assist with civil judgments and/or audits related to the fraud and offer services to help restore your credit.
Some policies cover the cost of loan application fees when you have to reapply because a loan was rejected due to credit fraud. A policy may also cover lost wages for time you lose from work to meet with attorneys and law officials in regard to your case. Your policy will have coverage limits, as a deductible, condition, and exclusions generally apply.
Proactive Steps You Can Take
Along with the protections identity theft insurance offers, you can take steps to protect yourself against this type of fraud by regularly monitoring your credit card and bank statements, using secured websites that have a locked padlock image and https:// in the browser window, and reviewing your credit reports.
Another thing you can do is to place a fraud alert with the major credit bureaus. That way, creditors know they must inform you before opening any new accounts in your name. A fraud alert also prevents a creditor from making changes to personal information on your account without first contacting you.
An additional way to protect yourself is to shred both bank and credit card statements as well as ATM and charge card receipts. You should also shred printed credit card application forms and other documents no longer in use that contain your Social Security number.
When looking for protection against identity theft, give the insurance associates at Finley Pinson Insurance a call. We'll be happy to discuss the insurance options available to you.