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Insurance Companies Market Identity Theft Protection
Cases involving Ohio University and the Veterans Adminstration have increased worries about identity theft in recent weeks. Where there is worry, there is often a business opportunity. Insurance companies have gotten into the business of identity theft – selling policies designed to help customers set things right.
Columbus truck driver Adam Smith has been fighting identity theft for three years. The problem with identity theft is you are guilty until proven innocent,
in 2003, Smith got a $500 phone bill for a phone number he did not recognize located at an address that was not his. Six months later he got call from a collection agency demanding he pay a cell phone bill for the same address.
It was just a real pain. I have dozens and dozens of hours invested in this, Smith said.
Over the past couple years major players in the insurance industry, including Columbus based Nationwide, have started to offer identity theft insurance. The policies generally cost between $50 and $100 a year.
The policies generally do not cover anything that is stolen by identity thieves. The policies only reimburse clients for any costs associated with stopping the fraud and recovering their identities.
Nationwide Insurance Product Manager Deb Harmon says her company’s policies reimburse up to 25 thousand dollars.
It covers the costs of affidavits, lost wages, attorney’s fees, Harmon said.
Nationwide and other companies also work with outside vendors who help victims stop any fraud. Clients only have to make one call and the vendor will guide them through the process.. calling credit reporting agencies, collecting and mailing out legal affidavits for victims to sign.
Adam Smith who did not spend anything but his time recovering his identity, thinks that’s a good product.
I would gladly pay someone to fix the problem for me, said Smith
Met Life offers the identity theft recovery for free to its homeowners and auto policy holders. Met Life product development manager Matthew Cullina says his company found customers don’t need coverage for the expense reimbursement
We really thought the service does the trick. Our experience so far is that no one has had to incur any expenses, not attorney’s were needed, Cullina said.
The lack of expenses required to end identity fraud has some questioning the need for identity theft insurance. Consumer Reports magazine last year listed identity theft insurance among the top ten unnecessary insurance policies..
Allessandro Iuppa is the Superintendent of Insurance in Maine – and president of the National Association of Insurance Commissioners. He agrees with Consumers Reports.
When you look at the cost and the potential benefit it’s certainly not a critical coverage that every American should have in their portfolio, Iuppa said.
Iuppa says while there is some interest in identity theft insurance, he calls the potential market modest at best.
Nationwide’s Deb Harmon disagrees – saying the market is growing tremendously – and competitors are jumping into it. 250 thousand Nationwide customers have bought identity theft insurance but only 150 people have filed claims. Harmon says for many people, identity theft insurance is needed.
With any type of coverage I think customers are very savy and they do shop around and find the product that’s best for them, Harmon said.
That’s what Maine Insurance Superintendent Iuppa recommends people do investigate before they buy. He says first check to see how much identity theft a current homeowners policy covers. Then he suggests consumers do a cost benefit analysis of id theft insurance and then shop around for the best deal.