Insure Your Most Highly Prized Possession

Physician's Money Digest, December 2005, Volume 12, Issue 16

BusinessWeek

How much is your identity worth? A growingnumber of insurance and credit card companiesare hoping that consumers will answer"a lot"and betting that you'll pay to protect your identity.According to an article in , identitytheft impacts more than 10 million Americans eachyear, and companies are looking to soften that impactwith insurance and credit-monitoring services designedto help consumers maintain their good credit.

Add up the Costs

Though most of these insurance policies are notexpensive—the average annual premium runs between$25 and $40—it's still a good idea to weigh the cost ofthe coverage against the benefits it provides. Accordingto the Federal Trade Commission (FTC), victims of themost serious form of identity theft—when largeamounts of debt occur due to charge accounts openedin your name—usually spend about $1200 and invest60 hours of their time to clean up the mess.

The time it takes to file police reports and contactcreditors can be considerable. And if you run yourown practice, that time can translate into lost revenue.Consider that individuals who take time offfrom work to right their credit report lose as muchas $16,000 in wages, according to the San Diego-basedIdentity Theft Resource Center (www.idtheftcenter.org). For an annual premium, all aspects ofrepairing your credit—phone calls, reports, andpaperwork—are covered under your policy in theevent you become a victim of identity theft.

An insurance policy cannot compensate for theemotional toll spent on identity theft. But if the premiumis reasonable and the product comes from areputable insurance company, Edmund Mierzwinski,consumer program director at US Public InterestResearch Group, says it could be worthwhile for thepeace of mind it provides. Before you sign on, however,make sure that the policy provides coverage forhigh-ticket items such as lost wages or the cost ofhiring a lawyer should you need to fend off collectionagencies. Some policies cap these benefits andothers come with a deductible.

Your best bet is to start with the company thatinsures your home. Insurers generally offer identitytheft policies as riders or attachments to currentpolicies. Some insurers, like Chubb, may offer freecoverage to customers with homeowners insurance.In addition, credit card companies offer stand-alonepolicies to their cardholders.

Protect Yourself

Even though the cost of identity theft insurance isreasonably inexpensive, the article points out thatthere are numerous steps you can take on your own toguard against becoming a victim:

  • Keep your Social Security number in a safe place,and do not carry your card with you.
  • Avoid giving out your Social Security number.
  • Ignore e-mail requests for personal information.
  • If you must read your credit card number overthe telephone, avoid eavesdroppers.
  • Shred preapproved credit card applicationsreceived in the mail and all other financial recordsbefore they are discarded.
  • Ask credit bureaus to put a fraud alert on yourfile, requiring that issuers check with you beforeissuing credit.
  • Check your credit report regularly.

If you become a victim of identity theft, you can gethelp through the FTC's Web site (www.ftc.gov), whichcontains detailed instructions on restoring credit andpreventing identity theft. In addition, Call For Action,an international nonprofit network, provides a freephone service (866-ID-HOTLINE) that is staffed bycounselors trained to assist victims.