By: Tracy Myers
You are likely aware that identity theft has become a large problem in our digital world. According to Reuters, nearly 12 million Americans were victimized by identity theft last year. The regularity with which identity theft occurs should be alarming to most everyone who conducts business online. However, did you know that your home insurance policy provides a certain level of coverage if you suffer losses as a result of identity theft? It’s a little-known coverage enhancement offered by many home insurance companies that can be very helpful in the event of a claim.
As you know, the standard home insurance policy will reimburse you for stolen personal property, as theft is a peril that policies insure against. When it comes to financial instruments such as money, coins, and bank notes, the home insurance policy usually has a special limit on coverage. This means the items are covered, but only up to an amount that is lower than the total limit on the policy. The reason for this is because these items are difficult to substantiate once stolen. The policy also covers stock certificates, checks, money orders, and other similar negotiable instruments at a different limit. These items are generally easier to trace and verify than cash, so the limit tends to be higher.
With these limitations on the loss of tangible items, you might wonder what kind of coverage is available for identity theft, which is the loss of something intangible. Thankfully, home insurance policies consider this to be a loss as well and provide coverage for losses to credit cards, debit cards, forgery, and counterfeit money. These losses are also limited to a lower amount than the total policy limit, but they often come with the benefit of not having to satisfy a deductible for coverage to effective. You can then report a much smaller claim than you normally would because the policy reimburses you immediately.
Most credit card issuers have imposed some type of limitation on your out-of-pocket exposure in the event of theft or unauthorized use. However, that’s still an amount you are responsible for and may never recover. The home insurance policy is a good option to turn to for recovery of this loss. The policy will also cover you for forgery or alteration of your personal checks. In addition to your checks being physically stolen, thieves may sometimes alter the checks and cash them for more than the intended amount. Another benefit is coverage for any loss you suffer as result of unknowingly accepting counterfeit currency.
Sometimes a case of credit card theft or fraud can become complicated and not easily resolved with your card issuer. If so, it’s not unheard of for a lawsuit to be filed against you for damages. Another feature of the home insurance policy is coverage for a legal defense on your behalf in the event of such a lawsuit.
With cases of identity theft through e-commerce becoming commonplace, you should review your home insurance policy to understand what coverage you may already have. It’s a good idea to be prepared prior a loss so that you know where to turn in the event you are the victim of an identity theft crime.