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Identity fraud costs Americans $23 billion — here's how identity theft insurance can help

If your identity is stolen, a policy can reimburse you for costs associated with getting your life back.

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Identity theft is a massive problem that shows no signs of slowing down: Americans lost $23 billion to identity fraud in 2023, according to Javelin Strategy and Research, a 13% increase from the year prior. logged

If you're worried about someone stealing your identity, you can be proactive and sign up for credit monitoring or identity theft protection. No protection is foolproof, though, and victims of identity theft spend an average of $1,200 to restore their identity — on everything from legal fees to lost wages while they sort through the mess.

Identity theft insurance can help you recoup many of those costs. Here's what you need to know, including what's covered, how much it costs and how you can sign up for a policy.

Identity theft insurance

What is identity theft insurance?

If your identity is stolen, it will take time, resources and money to reclaim it. Identity theft insurance can reimburse you for out-of-pocket expenses related to restoring your identity, from replacing lost or stolen ID to paying for lawyers to help restore your credit.

However, most identity theft insurance policies don't cover stolen money or financial losses from unauthorized use of credit accounts or other fraud.

Shop for homeowners insurance that works for you

How do I get identity theft insurance?

Most insurance companies offer identity theft coverage as part of their homeowners policies or as riders, though they typically don't include reimbursement for money or other assets taken by scammers.

Nationwide's standard homeowners policies include up to $25,000 in coverage for expenses relating to restoring your identity, with an option to increase that to $100,000.

Nationwide Homeowners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Not disclosed

  • App available

    Yes

  • Policy highlights

    Policy covers home and property damages caused by theft, fire and weather damage. It also covers personal liability, loss of use and unauthorized transactions on your credit card

  • Does not cover

    Water damage, earthquakes, flood insurance, identity theft, high-value items, rebuilding home after loss (these can all be purchased as add-ons for extra coverage)

Terms apply.

State Farm offers an add-on with its homeowner policies that includes coverage for fraud losses, identity restoration, cyberattacks and cyber extortion.

State Farm Homeowners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Not disclosed

  • App available

    Yes

  • Policy highlights

    State Farm's homeowners insurance offers coverage that's easy to bundle with other types of insurance and covers things like fire, theft or vandalism. It offers several discounts for home security systems and wind mitigation.

  • Does not cover

    Business or professional services, damage from flooding or underground water, earthquakes or mudslides, settling or deterioration, and animals, birds or insects.

Identity theft insurance can also be bought on its own: Amica's identity theft insurance pays up to $15,000 for legal fees, lost wages and more. USAA offers personal cyber insurance that covers identity theft and provides up to $50,000 in coverage. 

Amica Homeowners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Not disclosed

  • App available

    Yes

  • Policy highlights

    Amica offers two tiers of homeowners insurance coverage — a standard policy and the brand's unique Platinum Choice homeowners insurance. The latter offers extended coverage for jewelry, liability and covers more situations than a standard homeowners insurance policy. Add-on options include computer coverage, sump pump backup coverage, and dwelling replacement coverage.

USAA Homeowners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • Maximum coverage

    Not disclosed

  • App available

    Yes

  • Policy highlights

    Policy covers most weather-related damages, theft, vandalism, sudden and accidental water damage and mold. Also covers personal liability, personal belongings, dwelling and other structures and loss of use

  • Does not cover

    Flood insurance, water damage and mold that has built up slowly over time, high-value personal items

Terms apply.

Identity theft protection services also usually include some form of insurance: Experian IdentityWorks℠ Premium covers $1 million in out-of-pocket expenses, along with access to a dedicated team of fraud resolution specialists.

Experian IdentityWorks℠

On Experian's secure site.
  • Cost

    Basic: Free; Premium: 7-day trial, after $24.99 per month; Family: 7-day trial, after $34.99 per month

  • Credit bureaus monitored

    1-bureau credit monitoring, alerts and reports: Experian, with Basic plan only and 3-bureau credit monitoring, alerts and reports: Experian, Equifax and TransUnion®, with Premium and Family plans only

  • Credit scoring model used

    FICO® Score 8, with all plans

  • Dark web scan

    Yes, with all plans

  • Identity theft insurance

    Yes, up to $1 million with all plans

Terms apply.

*Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. (AIG). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.

Aura also includes $1 million in identity theft insurance, which can be used to recoup eligible losses and legal fees, as well as lost wages and childcare costs while you resolve the issue.

Aura

  • Cost

    Individual plan: $9/month billed annually or $12/month billed monthly; Couple plan: $17/month billed annually or $20/month billed monthly; Family plan: $25/month billed annually or $30/month billed monthly

  • Standout features

    Protects against financial fraud, identity theft, spam calls, online theft, phishing and scam websites, viruses and malware, as well as offering security tailored to kids and financial alerts like credit score monitoring

  • Availability

    Offered in both the App Store (for iOS) and on Google Play (for Android)

Terms apply.

Some credit card companies also include identity theft insurance: The CreditSecure™ program from American Express reimburses cardholders up to $1 million for out-of-pocket expenses associated with restoring their identity. There is a monthly $19.99 charge, though first-time customers only pay $1 for the first month.

For $15 a month, Discover® cardholders can get a reimbursement of up to $1 million with a $0 deductible for stolen funds, legal expenses and other costs. The Discover® Identity Theft Protection plan also alerts customers to changes in their credit reports and bank accounts and if their information appears on the dark web.

What does identity theft insurance cover?

Specifics vary by company, but identity theft insurance generally reimburses costs associated with the recovery process.

  • Costs of replacing your driver's license, Social Security card and other ID
  • Lost wages
  • Legal fees
  • Notary and mailing fees
  • Bank fees stemming from fraudulent financial activity
  • Cost of identity restoration specialists

What doesn't identity theft insurance cover?

Identity theft insurance typically does not cover direct monetary losses associated with identity theft, including stolen cash, fraudulent purchases or other unauthorized use of credit accounts.

The Fair Credit Billing Act caps losses from unauthorized use of your credit card at $50, but most card issuers have zero liability policies for fraudulent charges.

Even the best identity theft insurance can't protect you from becoming a victim of identity theft. For that, you'll want to look into an identity theft protection service, which monitors the use of your personal information, or a credit monitoring program, which can alert you to changes to your credit report, including hard inquiries and new accounts.

How much does identity theft insurance cost?

The price of identity theft insurance depends on how you obtain coverage: A standalone typically costs between $25 and $60 a year, but the cost of a full identity protection service that includes credit reports and other features can be significantly more.

FAQs

Identity theft insurance typically covers out-of-pocket expenses associated with restoring your identity, including legal fees, lost wages and resolution specialists.

The cost varies by policy, but standalone identity theft insurance typically costs between $25 and $60 a year.

In 2023, Americans lost $23 billion to identity fraud in 2023, and reported more than a million cases of identity theft. While insurance won't reimburse you for direct monetary loss it can cover the expenses associated with getting your identity back.

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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