Is your personal information, specifically your Social Security number, safe? Tens of millions of Americans are finding out the hard way that the answer is no. Just recently, two large health insurance providers, Anthem and Premera Blue Cross, have experienced a massive data breach – 13.5 million Anthem clients and employees and 11 million Premera Blue Cross customers were affected. In both instances the attackers accessed personal and health information, including address, email, phone, Social Security number (SSN), bank account, and claims data. Anthem and Premera Blue Cross are just two of many companies whose employees’ and clients’ personal information have been stolen, which demonstrate that this can happen to anyone.
While much attention is often put on the loss of credit card, healthcare records or other types of personal information, a SSN is actually much more valuable to the cybercrime market and can also cause greater damage to the victim. For instance, credit card companies typically notice unusual activity within hours or few days and will alert you while freezing the account. By the same token it may take weeks or months before it is noticed that a SSN has been stolen. In the meantime, a cyber criminal has the power to impersonate you and wreak financial as well as medical havoc by doing much worse than just maxing out your credit cards. They have the ability to acquire a loan, undergo expensive medical treatments, get prescriptions, open credit cards, and make large purchases such as property. All of these can greatly damage your credibility, reputation, and lifestyle.
How can you protect yourself from identity theft in case your personal information is compromised? In this post, I discuss and evaluate three options, which offer varying degrees of protection:
1. Credit Cards:
Normally credit cards offer the lowest amount of protection, but they also have the lowest level of exposure for damage because once your card is maxed out, thieves cannot cause any further damage. Furthermore, if your card is stolen, U.S. Federal Law limits the liability of the card holder to $50 regardless of the amount charged. And if just the credit card number is stolen, federal law guarantees the card holder has zero liability Although you are not held responsible for any fraudulent charges on your card for the most part, normally your credit card company does not cover you in case your SSN was compromised, unless they offer ID theft protection service, which you purchased for an additional fee. For this reason, I do not recommend you relying solely on your credit card company, especially for protecting all your personal information.
2. Identity Theft Protection Services:
With cybercrime increasing, the selection of different forms of identity theft protection programs are also growing. A number of companies offer different levels of services, so make sure you choose the right protection for your needs. In my opinion, an ideal program includes identity theft monitoring and restoration services for a small monthly fee. This entails proactive monitoring of any activity involving your credit report, SSN, credit/debit card numbers and other personal information. Also you may want to consider selecting a company that offers consultation once identity theft occurred and restores you to your original state.
Having said that, although this is a great option combining preventive and corrective measures, it is an additional out-of-pocket monthly cost.
3. Homeowner’s Policy:
While credit cards are limited in their scope of coverage and identity theft monitoring services are an additional expense, most homeowner’s insurance policies offer some level of identity theft protection that covers all your personal information. Usually there are two types of services included:
a. Fraud Expense Reimbursement:
If you conduct the identity theft recovery yourself, your homeowner’s policy will reimburse your expenses up to your coverage limit. This amount varies among insurance carriers but it is usually $25,000 or less. If you experience a serious identity theft case, I do not recommend that you do the work yourself as the process can be very frustrating, time consuming and the reimbursement limit might not cover all of your costs. Prior to starting your investigation, discuss your options with your insurance agent to ensure this is the most appropriate solution for you.
Usually a reimbursement program covers some or all of the expenses you incur to correct your identity related to:
- Obtaining credit reports
- Reapplying for loans or grants
- Making phone calls, mailing, and shipping
- Receiving legal assistance
- Losing wages and hiring child and elder care
b. Restoration Case Management
The best solution in my opinion is to have a comprehensive service that conducts the identity theft investigation and restoration process on your behalf. Although this service also has a coverage limit, usually it is significantly higher and can be up to $100,000. Some insurance companies include this option, but others offer it as an optional service; therefore, when shopping for homeowner’s insurance make sure to include identity theft protection.
In general a restoration case management covers:
- Any covered identity fraud up to 12 months
- A case manager who will work with affected agencies and institutions, including credit card companies, credit bureaus, and other businesses on your behalf to restore your identity.
Although you are likely to have some level of identity theft protection automatically included in your homeowner’s policy, it lacks the proactive continuous monitoring of your activities.
In light of the three options, you might be wondering which one would be the most appropriate for your particular needs. In order to select the right solution, here are some questions to consider:
- Are you interested in a comprehensive protection that safeguards all your personal information not just your credit cards?
- Do you prefer a proactive or a reactive approach to protect your identity?
- If the answer is proactive, which identity theft monitoring service would be most suitable for your needs?
- If you are more interested in a reactive approach, is comprehensive identity theft coverage automatically included in your homeowner’s insurance policy, or do you need to purchase additional services?
To learn more about identity theft coverage as part of your homeowner’s insurance policy or if you are an employer and interested in offering identity theft protection to your employees, please contact me at cmorsberger@psafinancial.com. I’m happy to help you with any of your personal risk management and insurance needs.
