Published: May 2015
If you have identity theft insurance, you've taken an important step to help protect yourself in the event of fraud. More than 12.7 million people were victims of identity fraud of some kind in 2014, according to a report by Javelin Strategy & Research, resulting in more than $16 billion in losses.
So, how do you file an identity theft insurance claim if you suspect you've been the victim of fraud?
Well, it depends on the type of identity theft coverage that you have.
Identity theft insurance usually doesn't pay for direct losses you've incurred as a result of the fraud (the charges on your credit card, for instance), according to the National Association of Insurance Commissioners (NAIC). Instead, it's designed to help cover expenses you incur in the process of reclaiming your identity — up to the limit stated on your policy. Typical expenses that are covered include phone calls, postage, notary costs, lost wages and, sometimes, even attorney fees, according to the Insurance Information Institute (III).
Some insurance companies also offer what's known as a restoration service, which assigns you to a fraud specialist who'll guide you through the process of fixing your identity, according to the III.
In either case, if you are the victim of an identity theft crime, the III says you'll want to start by reporting it immediately to the police and to the credit card company (or to the financial institution that holds the account you suspect has been compromised).
You'll need a copy of the police report to file an insurance claim or if you plan to report the crime to the Federal Trade Commission for their assistance, the III says. And by alerting the financial institution in question, you're helping prevent further fraud as well as helping limit your liability for any phony charges.
The way the process goes from here depends on the type of identity theft coverage you have.
If your identity theft coverage doesn't offer a restoration service, you'll have to do the legwork of restoring your identity yourself, keeping receipts to submit to your insurance company for reimbursement.
Some policies will require you to pay a deductible, says the NAIC, which may range from $100 to $500. In that case, you'll have to pay the cost of the deductible first, before your insurance coverage kicks in.
If you have a restoration service as part of your coverage, you'll likely have access to a professional to walk you through the process of restoring your identity. These types of services will vary, but, according to IDT911, restoration service may help you replace lost documents, talk to creditors or other groups on your behalf and provide credit monitoring and other support services.
Being the victim of identity theft can be frustrating. But it's nice to know that you have insurance coverage that can ease some of the discomfort and provide some much-needed help.