Q. My home insurer is offering identity-theft insurance. Is it worth buying?
A. Certain insurance companies, including major insurers such as Allstate, Liberty Mutual, State Farm, and Travelers, offer identify-theft insurance through an add-on "rider" or "endorsement" to homeowners or renters policies, says money editor Jeff Blyskal.
Most identity-theft insurance, which tends to cost between $25 and $50 per year, won't prevent or even alert you to identity theft but will reimburse you for losses or expenses (up to $25,000 in most cases) that you may incur as a result of the crime. That might sound good, but banks and credit card companies already cover most or all losses due to fraud. According to the Department of Justice's statistics, 88 percent of identity-fraud victims suffered no out-of-pocket loss in 2014, the latest year for which data are available. Of those who did lose money, the median loss was $70. The dollar amount is so low in part because of the aforementioned bank and credit card company coverage.
Identity-theft insurance coverage usually includes assistance in straightening out the aftermath of identity theft (canceling unauthorized accounts and so forth), which is generally easy when the fraud involves credit cards—the most common type—but can be more time-consuming for accounts at banks and other institutions. The assistance can vary from simple advice to a dedicated case manager who will make the calls on your behalf. If you purchase identity-theft insurance, make sure you know what it provides.
For tips to prevent crooks from getting your information in the first place, read "The Consumer Reports 10-Minute Digital Privacy Tuneup." And for related information check "66 Ways to Protect Your Privacy Right Now."
Send your questions to ConsumerReports.org/askourexperts.
Editor's Note: This article also appeared in the February 2017 issue of Consumer Reports magazine.