Most home insurance policies now offer a provision that gives some degree of protection against the risks of identity theft. This is normally included in the insurance policy as standard, or offered as an optional extra at a minimal extra cost. Insurance companies perceive risk of identity theft as being a serious one, and one that can affect the nature of your home and your home insurance quite dramatically.
Identity theft tends to occur when an individual has certain crucial information about their identity stolen - for example their bank details, their social security details or their pension arrangements. Once enough information of a key nature has been stolen about an individual, the thief then creates a separate entity in the name of the person they have stolen the information from. The thief then enters a number of financial arrangements that can generate significant amounts of money in the name of the individual they have stolen the identity from. The thief then defaults on loans or mortgages taken out and the true victim is then left with having to sort out the fact that someone has stolen their identity and used it to involve them in a massive financial fraud.
If someone runs a business from their home as well, the risks of this happening increase dramatically, and the subsequent impact of trying to sort it out afterwards would become almost unbearable for many people. Great care should be taken in how all information is both delivered and sent, both electronically and by more traditional means.
The insurance cover that insurance companies provide under a home insurance policy tends to be preventative rather than really helping the individual deal with any identity theft once it has occurred. This means that the cover under a home insurance policy is likely to offer benefits such as credit scores and checks etc.
One of the real problems that people face when confronted with the risks of identity theft, is that many people do not think it could ever happen to them. In addition when it does happen to someone they do not know about it, normally, until after the event and are faced with having to prove they have not defrauded some financial institution of a huge amount of money.
One of the best ways to prevent identity theft is the realisation that most of the vital information that is required to steal someone's identity is still normally sent by snail mail or by carrier. This means that it is possible to have a greater awareness of certain items that should be delivered at certain times or dates, and if any reason they do not arrive or go missing, then that should act as a red flag to the individual concerned. The other important way to prevent identity theft is to make sure that all documents that contain any type of sensitive information about the individual or their business is shredded and disposed of accordingly. If an individual is concerned that their identity has been compromised, they should firstly notify their insurance company and seek their help and guidance as to the way forward to trying remedy the situation, as well as immediately notifying law enforcement
Peter Main is freelance writer who has spent almost twenty years in the insurance industry, working at Lloyd's of London. He writes extensively about home insurance and in particular about how home insurance works in covering buildings, contents, identity theft, liability, and garden and lawn machinery such as garden tractors, snow blowers etc.