Identity Theft Monitoring and Insurance Plans

In my last post I discussed identity theft – what it is and how to prevent it.

What about identity theft monitoring or insurance? Does it make sense to purchase it?

An important note up front – no product or company can protect you from having your information stolen. The most common way your data is stolen is through data breaches. If you have a Yahoo account, for example, some of your data has already been stolen and, as we have learned recently, it has probably been sold several times over.

That doesn’t mean there aren’t steps you can take to secure your information better (see last post for ideas), but having identity theft “insurance” doesn’t prevent your data from being stolen any more than having auto insurance keeps you from being involved in an accident.

Let’s take a look at each of the various types of identity theft protection – monitoring, insurance and recovery.

MONITORING SERVICES

Monitoring services alert you when someone else might be using your information. Services generally include:

  • Tracking activity on your credit report
  • Sending you an alert when your personal information (bank account, Social Security number, driver’s license number, passport or medical ID) is being used
  • Access to credit reports and/or scores

No company or service can monitor all activity on all websites and merchants, but most of these companies do their best to monitor your personal information at as many places as possible.

IDENTITY THEFT INSURANCE

Identity theft insurance pays for out-of-pocket expenses incurred for recovery, which may include:

  • Postage, copying and notary fees
  • Less often, lost wages and legal fees

A few important notes about identity theft insurance:

  • This type of insurance almost never covers stolen money or other financial losses
  • There is generally a deductible
  • There is no payout if the loss is covered by any other types of insurance, such as homeowner’s or renter’s insurance
  • The majority of people who are involved in identity theft have almost no out-of-pocket losses. Most people pay little to nothing to copy or print things at home, postage is cheap and notary services are usually free at your bank. By the time your deductible kicks in you are unlikely to gain anything.

RECOVERY SERVICES

Recovery services help you deal with the effects of identity theft after it happens. Services generally include:

  • Assigning a case manager to help you work through the process
    • With some plans you actually grant authority for the case manager to act in your name, with others they guide you through the process
  • Placing a fraud alert on your credit file
  • Placing a security freeze on your credit file
  • Helping you prepare letters to send to collectors
  • Closing any tampered or fake accounts and opening new ones

Let’s take a look at two specific companies – LifeLock and Zander Insurance.

LifeLock[i]

Standard protection is $10 a month or $109 annually. Prices go up to $29.95 a month for premium services.

Basic services include:

  • Website surveillance
  • Cancel credit cards if stolen
  • Send alerts when your information is being used
  • Replace stolen funds up to $250,000 (only what the bank won’t replace)
  • Spend up to $1,000,000 on lawyers, accountants or others to restore your previous status

Zander Insurance

Zander is $75 year ($6.76 a month) for an individual or $145 a year ($13 a month) for family protection.

Zander operates their protection plan on the premise that financial identity theft is only one of more than 15 types of identity theft. There is also Social Security, criminal, employment, medical, tax refund and other types of fraud, many of which won’t be discovered by monitoring. In many cases you won’t know you have been a victim until you get a letter from the IRS or a doctor bill or even a warrant for your arrest.

Their focus is on identity theft recovery. Services provided include:

  • Up to $1,000,000 reimbursement for any stolen bank funds or unauthorized electronic funds transfer (only what the bank won’t replace)
  • Unlimited legal fees if needed
  • $0 deductible
  • Contact banks, bureaus, insurance companies and doctors for you

What I Recommend

No strategy is perfect, but this is my plan:

  • Use CreditKarma.com for monitoring (they send me an e-mail anytime something changes on my credit report)
  • Use YNAB (youneedabudget.com) to review my bank and credit card transactions daily
  • Shred any documents with financial or personal information
  • Use https://www.optoutprescreen.com/ to stop receiving most pre-screened credit card offers
  • Put a security freeze on my credit bureau reports
  • Check one credit report every 4 months on annualcreditreport.com
  • Copy the front and back of all cards in my wallet
  • Use a service such as LastPass.com to manage and use different, secure passwords on each website
  • If my wallet is stolen or I am a victim of a breach place a 90-day fraud alert on my credit bureau accounts
  • Sign up for Zander’s plan for recovery services (I believe it is worth the $145 a year for the services they will provide)

If you have taken all of these steps but choose not to sign up for recovery services, the FTC has created a new website that will help you recover. It generates pre-filled letters and walks you through exactly what you need to do to recover. You can find the website at http://www.identitytheft.gov.

 

 

Identity Theft Protection

[i] For both LifeLock and Zander be sure to review their services before signing up. Services may have changed since this article was written.

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Basics of Renters Insurance

apartment fireIf you live in an apartment and a candle tips over and starts a fire, who is responsible for the damage? What if a thief breaks in and steals your TV and other electronics? Is your landlord responsible to replace those items?

In both scenarios YOU, as the renter, are responsible for the damage or loss.

In the last two posts I have covered auto and homeowners insurance. These week I will conclude this series with a post about renters insurance.

Renters insurance typically covers theft, vandalism and fire (or smoke) damage. Some policies also cover water damage. Pipers bursting, sewage backup, earthquakes, floods and other “Acts of God” are typically not covered.

The three main parts to a renter’s policy are:

  • Contents
  • Loss of use
  • Liability

Contents

You may not think you have much of value, but the average renter has about $30,000 worth of “stuff”, from furniture to clothes to electronics.

Renters insurance will replace items stolen or damaged by a covered event.

You can get Replacement Cost coverage or Actual Cash Value coverage.

Actual cash value takes into account depreciation. For example, let’s say you own a $5,000 TV that typically lasts for 10 years. If that TV is stolen after 5 years you will get $2,500 for it from the insurance company.

With Replacement Cost coverage you will typically get a check for the actual cash value (in our example above you would get $2,500), then when you submit a receipt you will get a check for the remainder, up to a set dollar amount.

You should always get Replacement Cost coverage if it is available.

Most policies cover your items while you are travelling and some will cover items in your vehicle as well.

Before the insurance company will pay anything you have to pay your deducible. The higher your deductible, the lower the premiums will be. Be sure you have a deductible you can afford, though.

To prove what you own you should have pictures or a video of your contents. You may also want to have a list of what you own and how much you paid for it.

Contents coverage will typically only cover a limited dollar amount, so if you have an expensive or valuable item make sure your insurance agent knows about it and you can get additional coverage for it.

Loss of Use

If you have water, fire or smoke damage your apartment will typically be uninhabitable for some period of time while it is being repaired.

Loss of use will cover your rent in a similar apartment or hotel for a limited period of time.

Liability

Liability coverage will typically cover legal costs, bodily injury and property damage caused by your actions or negligence. It will also often pay a set amount for medical payments for your guests who are injured.

Cost

You will pay a monthly or annual premium for your coverage. Average policies cost between $15 – $30 per month.

For those that live in Utah, get in touch and I would be happy to get you a quote for renters, auto or homeowners insurance.

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An Overview of Homeowners Insurance

homeowners-insuranceOne of the easiest ways to save some money is to do an occasional review of auto and homeowners insurance. Last week I wrote about auto insurance (http://blog.ryanhlaw.com/an-overview-of-auto-insurance/) and today I will discuss homeowners insurance in more detail.

The majority of homeowners insurance policies will pay for most losses unless the loss is caused by something excluded. Things that usually aren’t covered by any insurance includes routine maintenance, damage from flooding[1] or landslides, damage from earthquakes, sewer backup and acts of terrorism.

PROPERTY PROTECTION

Four specific things are covered by the property protection portion of your insurance:

Part A: Dwelling and attached structures

This covers damage to your home and any attached structures (an attached garage, for example). For example, if your roof is damaged in a hail storm and you need a new roof Part A would pay for a new roof. If your stove catches on fire and your kitchen is destroyed, Part A will pay to repair the damage.

Part B: Detached structures

This covers any structures that aren’t attached to your main home – a detached garage, a storage shed, etc. Coverage is usually 10% of Part A. If, for example, you have $200,000 worth of insurance in Part A you would have $20,000 worth of insurance on Part B.

Part C: Personal property

This includes all the property in your home – your TV, computer, clothing, etc. It is important that you have a record of what you have in your home so you could prove what you owned if it was stolen or destroyed.

Coverage is limited for many items, so you may need a rider if you have a collection or expensive pieces of jewelry, furs, stamps, firearms, antiques, tools, memorabilia or other similar items.

You will have a deductible for the property protection portions of your insurance – standard is $1,000, but if you have the cash you can raise your deductible which will lower your premium.

You want to look carefully to see if you have replacement cost or actual cash value. Replacement cost will pay for a replacement (i.e. if you have a 25-inch flatscreen TV that is stolen you will get a new 25-inch flatscreen TV). With actual cash value depreciation is taken into account. If your 25-inch flatscreeen is 5 years old and the insurance company figures that TVs last for 10 years you will only get about half the cost of a new TV.

Part D: Living Expenses

If you can’t live in your home while repairs are being made or while it is rebuilt this portion will help pay for similar living expenses.

LIABILITY COVERAGE

The other part of homeowners insurance is liability coverage – which provides coverage for personal injuries or property damage that you or others living in your home may be responsible for.

This portion covers the cost of your defense regardless of whether or not you are found liable. If you are found liable your insurer will cover damages up to the total of your liability coverage.This can be on or off your property and it does not cover intentional acts.

Included as part of liability insurance is medical payments to others that will help pay the doctor’s bills for people injured by you, a family member or your pets.

Other standard coverage includes:

  • Fire Department Service Charge, which will pay the cost of a fire department run
  • Debris Removal coverage, which pays for the cost of removing damaged property

As a reminder, for those that live in Utah, I am happy to review your homeowner’s insurance coverage and run a quote against a number of the nation’s highest rated companies to see if I can save you some money.

[1] Flood Insurance is provided by the federal government – you can access that at www.floodsmart.gov

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