Consumer Reports: Is identity theft insurance worth it?

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Whether you're shopping online or swiping your card at a store, hackers have lots of opportunities to steal your identity. (WLS)

Whether you're shopping online or swiping your card at a store, hackers have lots of opportunities to steal your identity. In 2015 alone, $15 billion was stolen from 13.1 million Americans. You can buy inexpensive identity theft insurance. But is it worth it? Consumer Reports says there are some things you should know.

It's no secret that identity theft has become a huge problem.

Some companies are looking to cash in on consumer anxiety, by offering identity theft insurance.

For $25 - $50 a year companies like Allstate, Liberty Mutual and State Farm, offer it as an add-on to your home or rental insurance. In most cases, they'll reimburse you up to $25,000 for covered losses.

"That sounds pretty good but most banks and credit card companies already cover you for losses due to fraud. And most victims actually suffer very little or no out of pocket losses," said Consumer Reports Money Editor Lauren Lyons Cole.

So what does ID theft insurance actually get you? Typically, coverage includes assistance in dealing with the aftermath of identity theft, which can be time consuming, like covering out of pocket expenses, or supplying a case manager to make calls on your behalf.

"But this insurance isn't designed to alert you to identity theft. That's what identity protection services do. It's really there for what happens after you've been compromised," Lyons Cole said.

Consumer Reports says taking matters into your own hands can be more effective and cheaper, like freezing your credit report, and signing up for free online apps to monitor your checking and credit accounts daily.

If you do opt to purchase insurance, Consumer Reports says make sure you look closely at what you are getting and what you're paying for.

All Consumer Reports Material Copyright 2017. Consumers Union of U.S. Inc. ALL RIGHTS RESERVED. Consumer Reports is a not for profit organization which accepts no advertising. It has no commercial relationship with any advertiser or sponsor on this site. For more information visit consumer.org
Related Topics:
financeidentity theftinsuranceconsumer reports

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