Should you buy identity theft insurance?

Identity theft is a crime that involves using another person's personal information, such as their full name, credit card details, and Social Security number, to commit other crimes. Identity theft is a serious crime with far-reaching consequences and can take many forms: virtual, medical, and financial. Unfortunately, rates are only increasing, as cases have risen from 2% of Canadians who were victims of some form of identity theft in 2010 to 20% in 2020.

In addition to taking the necessary steps to protect your identity and personal information, there is another solution. Many insurers—whether for condominiums, homes, renters, etc.—offer identity theft insurance, which can be purchased as an add-on. Given the prevalence and high risk of identity theft, one might think that identity theft insurance is an essential purchase. Here's a look at whether or not you should buy identity theft insurance.

What identity theft insurance covers –

Identity theft insurance can be purchased as an add-on and is designed to cover all expenses related to restoring your identity. Policies vary by carrier, but you can expect the following expenses to be covered:

Certified shipping costs
Notary fees
Researching information on the black market
Search in public records
Loss of salary

However, an identity theft insurance policy will not cover direct losses, meaning money stolen from your credit card or otherwise, and your policy is subject to a deductible. You may also have limits to your coverage.

How much does it cost to buy identity theft insurance?

Insurance policies vary depending on the scope of your coverage, your limits, and your geographic location. You shouldn't expect to pay more than $100/year for identity theft insurance, however, as this policy is generally among the least expensive add-ons for property insurance policies.

Do you need identity theft insurance?

It depends. Unfortunately, there's no single answer to that question, and the fact is, it really varies depending on your specific situation. In some people's cases, the extra bonuses might not be worth the actual financial losses resulting from a case of fraud or identity theft. It might be better to dedicate your time and effort to discussing with your employer how to request leave in the event of identity theft. This can help you assess the total potential financial losses.

That said, insurers debate the value of identity theft and fraud protection extensively. Identity theft insurance aims to address any issues related to identity theft, including legal assistance and time off work. If you anticipate significant financial losses due to being away from work while trying to resolve your identity theft situation, you might consider adding this coverage to your policy.

Prevent identity theft

Insurance is one thing, but it's important to take the necessary precautions to protect your identity and personal information before even considering buying a policy. Here are a few tips:

Disable automatic login, location updates, and geotagging photos
Make sure your connections are secure.
Never show anyone the details of your personal or financial documents.
Activate your unusual activity alerts
Use multiple passwords for different accounts that use different uppercase and lowercase letters, symbols, numbers, and letters.
Use multi-factor authentication, such as an ID number and a fingerprint.
Do not allow any website or search engine to store your passwords.

These are just a few tips, but the unfortunate reality is that identity theft can still happen even with all the necessary precautions we take. You're probably already taking most of these precautions, such as signing up for fraud alerts and shredding sensitive physical documents.

If you become a victim of identity theft, you should call your local police and file a report as soon as you suspect your personal information has been stolen. Contact Equifax Canada (at 1-800-465-7166) and TransUnion Canada (at 1-877-525-3823).

Finally, you will want to report the incident to the Canadian Anti-Fraud Centre. This can be a lengthy process, but it is important to do so in order to begin the identity recovery process.

Information on identity theft insurance

So, do you need identity theft insurance to supplement your existing personal property policy? Maybe. There's no single answer to this question, and it's really up to you to decide if the increased premiums are worth the potential losses. Talk to your friendly Panda7 representative if you'd like an experienced broker in your area who can help you make a decision.

If you can't make a 100% decision, you might consider purchasing a basic level of protection, but avoid anything labeled "premium" or "enhanced." These can cost you more than they're worth, and basic protection will give you peace of mind without breaking the bank. Additionally, you'll want to review your current safeguards for protecting your personal information and see if there's anything you can do to improve your prevention strategies.