Insure Your Identity?

With anxiety over theft rising, so is the push to sell you protection.

By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance

August 2, 2006

Even if you've been extremely careful to protect your personal information -- dutifully shredding documents, jealously guarding your social security number and scrupulously avoiding Web sites that ask for personal details -- you could still become a victim of identity theft. As recent events at ChoicePoint and Bank of America show, you can't control what happens to information others have collected about you. So it's no surprise that credit bureaus, credit-scoring firms and insurance companies are rolling out products to help you monitor your credit report and fix any problems.

For $100 a year, Equifax will provide you with unlimited credit reports, alert you to key changes in your record, provide $20,000 worth of identity-theft insurance and give you access to a special hotline that will help you straighten things out if your identity is stolen. The insurance will cover up to $2,000 in lost wages if you have to take time off from your job to clear your name, as well as the cost of refiling any loan applications rejected because of faulty information in your credit files.

Is it worth it? It's tough to put a high value on the monitoring services, particularly because everyone in the U.S. has right to receive one free credit report per year from each of the three credit bureaus through AnnualCreditReport.com or by calling 877-322-8228. Because you're entitled to one report from each of the major credit bureaus -- Experian, Equifax and TransUnion -- you can monitor your credit file throughout the year by staggering your requests for free reports every four months.

There's no doubt that the help offered under the insurance plans could come in handy if you're a victim of identity theft. Unfortunately, the credit bureaus offer their insurance only as an add-on to their monitoring services. Before you bite, check to see if your homeowners policy covers identity theft. MetLife offers free ID-theft insurance as part of its basic homeowners- and auto-insurance policies.

If you suspect you've been the victim of identity theft, call the Federal Trade Commission's Identity Theft Hotline (877-438-4338) and immediately contact one of the credit bureaus to have a fraud alert placed on your account. That bureau will notify the other two, and you'll be entitled to more free copies of your credit report from all three bureaus.

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