Identity Theft Insurance

When I got home last night, I was catching up on the news with my wife. She had read a story on a recent mortgage fraud and asked me if we should be getting insurance for identity theft.

I did not know that the insurance industry offered such products. They do. Most are offered through homeowner insurance products. Are they necessary? Are they worth the cost? I am not convinced. And, a Forbes article of a couple of years back, reached a similar conclusion.

More disturbing though, was this blog on Mortgage Fraud. Some of the reports are quite troubling like this one.

The following is taken from the Identity Theft Index Canada Survey found here:

The ITIC poll found that one in four Canadians reported that they have been, or someone they personally know has been, a victim of identity theft. This is made up of nine percent who said they, or they and someone they know personally, have been victims; and 17 percent who said someone they know personally has been a victim.

As a possible result of these experiences, one-third of respondents said their level of concern about them or someone they know becoming a victim of this crime is higher than a year ago.

The types of fraud resulting from identity theft crime are wide-ranging, according to the ITIC poll. Among those who have been a victim or personally know someone who has been a victim of identity theft, seventy percent said the identity theft resulted in unauthorized credit card purchases, the most frequent, but least costly form of identity theft fraud for consumers. However, significant percentages of these respondents reported more serious frauds, including takeover of existing credit card accounts (43%), the opening of new credit card accounts (36%) or new loans (22%), unauthorized bank account access (42%) and the use of the victims’ personal information in other types of frauds, such as to obtain government benefits or medical care (24%).

“Many cases of identity theft perpetrated against Canadians are resulting in serious crimes that go well beyond simple credit card fraud where the consumer’s liability has traditionally been limited,” said Sheila McCracken, who represents Intersections’ Canadian solutions group. “These more significant frauds can have serious implications for consumers in terms of losses.”

The majority of identity theft fraud in Canada appears to be self detected. More than one-third (34%) of Canadian victims discovered the fraud while reviewing their bank or credit card statements (26%) or credit reports (8%). Thirty percent reported that their bank or credit card company first discovered the fraud, the ITIC poll found.

It is not surprising then that 92 percent of Canadians said they are responsible for protecting themselves from identity theft. However, compared to the results of a previous poll conducted for Intersections in June 2004, increasing majorities also feel that others, such as banks (87%, up 3%), credit card companies (85%, up 2%) the government (79%, up 11%), credit bureaus (75%, up 4%) and retailers (72%, up 2%) are also responsible for protecting them.

Encouragingly, seventy percent of respondents reported that they consider themselves ‘very well’ or ‘somewhat’ informed about how to protect against identity theft. When asked what steps they have ever taken to protect against identity theft, a majority of respondents said they have followed the security procedures requested by their credit card company (68%), reviewed their credit reports (65%) or bought a shredder or destroy documents (54%). Fewer Canadians have stopped banking or shopping online (30%), subscribed to a credit monitoring service (18%) or bought identity theft insurance or other identity theft recovery services (17%) to protect against identity theft.

Better make sure that our shredder is still working.