Identity theft insurance is designed to cover some of the costs related to identity theft. It reimburses victims for money spent on reclaiming their financial identities and repairing their credit reports. Those costs can range from phone bills to legal help. Policies often provide specialists who can help guide victims through the identity restoration process.

You probably already insure your auto, home and health. Should you add identity theft insurance to the list?

In this article, you’ll learn more about identity theft insurance to help you decide whether it’s right for you. For starters, you’ll find out how to get identity theft insurance and what it usually covers.

How to get identity theft insurance

Identity theft occurs when someone uses your personal information to commit fraud or other crimes. Reclaiming your identity can be slow and costly. That’s where identity theft insurance can help.

If you decide you want identity theft insurance, you have at least three options. Here’s what you can do.

• Check to see if it’s already included in your homeowners or renters insurance policy.
• Add it to your homeowners or renters insurance policy.
• Buy it as a standalone policy.

Identity theft insurance usually costs from $25 to $50 a year, according to the Insurance Information Institute. That estimate is the same whether you’re buying a standalone policy or adding a “rider” or “endorsement” to your homeowners or renters policy.

Most policies have benefit limits. Those can range from $10,000 to $15,000, according to the National Association of Insurance Commissioners. So, if your cost of recovering from identity theft were, say, $25,000, you would have to pay the difference.

Some policies have deductibles. That means you may have to pay the first $100 to $500 of costs before your identity theft insurance kicks in.

You can also look at getting protection from an identity theft protection service, which can provide additional features such as monitoring for suspicious uses of your information, or dark web monitoring.  Companies sell such services directly to consumers. Your employer may also offer an identity theft protection service as a benefit.

What identity theft insurance usually covers

An identity theft insurance policy can reimburse you for some of the expenses incurred from the day to day activities and efforts made in trying to restore your identity and repair your credit.

Here’s a list of expenses that might be covered, depending on the policy.

• Copies of your credit reports
• Long-distance phone calls
• Lost wages
• Notary fees
• Mailing documents
• Legal fees
• Child care costs
• Credit monitoring services

Keep in mind, identity theft insurance does not cover direct financial losses you may incur as a result of identity theft. It only reimburses some of the expenses that happen after identity theft occurs.

Do you need identity theft insurance?

Identity theft insurance, like some identity theft protection services, can help victims of identity theft cover some of the financial costs when identity fraud occurs.

When deciding whether to buy identity theft insurance, it’s important to understand what your policy covers. For instance, one policy may include some legal fees, but another may not.

Similarly, if you have to take time off from work to restore your identity, you’ll want to understand the details of how a policy may reimburse you for lost wages.

In other words, as with any insurance policy, it’s important to understand the fine print.

In comparison, identity theft protection services often help protect you in additional ways for a fee. For instance, they usually offer credit monitoring to help detect suspicious activity that could indicate identity theft.

They may also offer restoration services, including assistance working with creditors. And unlike identity theft insurance, they may also reimburse funds stolen through identity theft.

Things to consider before you decide

If you’re shopping for identity theft insurance, it’s smart to compare products from several insurance companies.

The National Association of Insurance Commissioners provides this list as you do your research.

• Find out what the policy limits are.
• Find out if there is a deductible.
• If the policy covers lost wages, find out what limits apply and what triggers this coverage.
• If a policy covers legal fees, find out what limits apply and whether legal work must be pre-approved by the insurer.

Identity theft insurance may help

Identity theft insurance is worth considering. Whatever you decide, keep in mind that if you’re a victim of identity theft, it could have other repercussions.

For instance, thieves may still have access to your personal information. They could use that information to fraudulently file taxes or get a credit card or medical care in your name.

Those fraudulent accounts could go on to lower your credit score and your ability to borrow money at favorable rates.

Identity theft insurance offers some benefits, but no product can prevent all types of identity theft from happening.

That’s why it’s important to guard your personal information and take steps to help protect yourself.