Does my Homeowners Insurance Policy Protect me in the Case of Identity Theft

“From January – December 2007, the FTC received over 800,000 consumer fraud and identity theft complaints. Losses were reported to be in excess of $1.2 billion. Credit card fraud was the most reported at 23%.” (Source – FTC

Protect yourself! Homeowner’s may be protected by their homeowner’s insurance policy for certain types of fraud and identity theft expenses. These may be offered as an endorsement to your policy or it may be possible to increase your coverage for an extra fee. This fee is well worth the annual cost if you ever become a victim.

Companies will provide you with a document detailing your coverage limits and obligations in the event of a fraud occurrence. An insurer may cover damages resulting from unauthorized use of a credit card or ATM card (issued in the policyholder’s name), loss from check forgery/alteration as well as loss if the insured receives counterfeit U.S. or Canadian currency (verify with your insurer) in good faith.

Expenses may include fees, certified mail costs, lost wages, removal of lawsuits both civil and criminal from creditors and collection agencies as well as a multitude of other expenses. It cannot be stressed enough for you to read your Endorsement and understand it.

There may be limits, ensure you know them. Some insurers may require their prior approval before you can start a process. Ensure you are fully aware of your obligations to notify your insurance company prior to undertaking an expense.

Insurers may also have specific guidance as to what they consider fraud. Giving your card to someone who then misuses it may not be covered as well as if a resident of your home steals your credit card and uses it without your consent.

You must comply with the terms and conditions of your stolen device (credit card, ATM card, etc) to be covered. Follow your terms and conditions to maintain your coverage.

The fraud deductible limit may vary from a damage claim against your policy for physical damages.

Know your duties to your insurer in the event of fraud. It is best to keep all receipts pertaining to the fraud until after you have received reimbursement. Provide receipts while keeping a copy for your records.

The best way to be insured against identity theft is to prevent it. To prevent it, there are several simple steps you can take to reduce your risk.

When shopping, keep your credit card secure until actual payment is made then promptly return it when finished minimizing exposure. Pay particular attention if someone appears to be using their cell phone in your area. It is easy to snap a photo of a credit card with a phone unnoticed.

Your mailbox is another source of theft. Do not leave incoming mail there any longer than necessary. Shred or burn pre-approval credit forms, remove your name and address from catalogs and other mailings. Look inside catalogs for the pre-filled order form near the center well.

Any financial documents you intend to dispose of such old bank statements, blank checks that may be from an old bank you no longer use, etc these must be destroyed beyond use. Burning is best; shredding can be a tedious process for a large pile. Watch for businesses doing “shredding drives” in your area. They will gather items people do not wish to throw in a landfill but need to dispose of. These drives will typically destroy the items for you for free while maintaining security until destroyed.

When online always err to safety by shopping at sites that encode your credit card information with a minimum 128 bit encryption. Look for the padlock in the lower right corner of your browser when entering your information. If it is not there, consider looking elsewhere for your purchases.

NEVER respond to emails sent requesting you login and verify information. Your financial institution would NEVER send such correspondence. They have your home mailing address and your telephone number and can call you. If you receive a telephone call, DO NOT provide any information. Instead tell them you will hang up and call back. Use a local number; do not use a number they provide!

If your work requires you to be away from your house mailbox, DO NOT leave outgoing mail in your mailbox. Instead drop it at a drop box. This reduces the chance of theft of your outgoing checks and duplication.
The risk of fraud rises daily as people find new ways to steal. Protect yourself by reducing your risk and insure yourself in the event it happens. Insurance will help replace funds spent clearing your credit if your identity is targeted and stolen.