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Identity Theft – Do You Need Insurance Protection?

Identity theft and fraud are some of the fastest growing crime rates across Canada and can happen to anyone. If you’ve ever been or known a victim of identity theft and/or fraud, you already know the impacts can be devastating; from banking, credit, identification fraud, to new loan applications, fraudulent passports, and credit applications in your name – the possibilities for identity thieves and fraudsters seem endless.

It’s becoming increasingly important to protect your identity and ensure that your identify remains safe and secure – but what are the necessary precautions to ensure that you are protected from identity theft? Is insurance worth it? Let’s look into the stats, how you can protect yourself, and whether or not you should add it to your home insurance policy.

Identity theft and fraud today

The ubiquity and interconnectedness of social media has redefined identity theft in the last several years. Identity thieves and fraudsters are no longer relegated to a forgery kit of blank passports, tweezers, ink, sealing wax, and photos – all they require is a name, address, and internet access.

Online identity theft and fraud are emerging through the use of social media, email phishing scams, and even through unsecured public Wi-Fi hotspots.

It might be for this reason that identity theft and fraud in Canada has steadily increased by 14% over the past 10 years. Moreover, with over 17,500 reported victims of identify fraud and theft in 2017 alone, identity theft and fraud are emerging as some of the fastest-growing crimes across Canada.

What is identity theft?

The criminal code of Canada defines two categories of crimes related to fraud and theft of personal information: identity theft and identify fraud.

Identify theft refers to the process of acquiring and gathering your personal information for the purpose of criminal activities. Typically, identity theft occurs in the early preparation stage of identify fraud and it is illegal to possess personal information

Identity fraud is the more serious act of using personal information for unlawful purposes such as applying for credit, loans and government benefits, accessing your financial assets, and even obtaining passports.

How to avoid identity theft?

There are some traditional albeit necessary precautions to protect your personal information that you might already be doing. They include things like shredding your mail, opting out of pre-approved credit cards and junk mail, and registering for fraud alerts with your financial institution.

While these are some of the more traditional forms of protecting yourself from identity theft and fraud, protecting yourself online is also a crucial step in deterring identity fraudsters and thieves. Contemporary research on social media and identity protection suggests the following steps you can take to avoid online identity fraud and theft:

Below are a few key steps you can take to prevent identity theft online

  • Never display details of personal or financial documents;
  • Turn off auto-login features;
  • Avoid location updates;
  • Stringent privacy settings;
  • Ensure your connections are legitimate and authentic;
  • Make use of double authentication;
  • Use a strong password and avoid using the same passwords for multiple accounts;
  • Never keep credit card information online;
  • Avoid geo-tagging photos;
  • Enable Alerts for unusual activity.

If you are in the unfortunate circumstances of suspecting you are the victim of identity theft and fraud, there’s a wealth of information online to help you recover. For example, the RCMP hosts a step-by-step process for avoiding, reporting, and recovering from identity theft and fraud:

  • Step 1 – Contact your local police force and file a report;
  • Step 2 – Contact your bank/financial institution and credit card company;
  • Step 3 – Contact the two national credit bureaus and place a fraud alert on your credit reports:
    • Equifax Canada: Toll free: 1-800-465-7166
    • TransUnion Canada:Toll free: 1-877-525-3823
  • Step 4 – Always report identity theft and fraud. Contact the Canadian Anti-Fraud Centre.

Do you need identity theft protection premium plans on your home insurance?

If you are concerned about identity theft or fraud, most insurance providers offer a baseline protection and coverage scheme as part of your comprehensive home insurance or condo insurance.

For example, The Cooperators offer up to $10,000.00 as Identity fraud coverage expense for damages sustained as a result of identity theft. Moreover, they offer up to $25,000.00 if you enroll in their Prestige Plus program.

That being said, is it worth it? Does paying extra premiums for insurance protection plans around identity theft outweigh the actual costs of damages as a result of identity theft? Let’s look at what some of the experts are saying.

Unfortunately, industry experts are unable to reach a consensus on the value of personal identity theft and fraud insurance. But, a report by the Public Interest Advocacy Centre suggests that insurance coverage for identity theft and fraud are of “questionable value” and, “given that its major potential claims items, that is, payment for time off work to resolve identity theft issues, as well as legal assistance, are capped at low recovery levels. Uncertainty over the extent of “legal assistance” under these agreements abounds, and it is noted that most identity theft victims do not actually need full legal defence services to recover from identity theft.”
(Public Interest Advocacy Centre, 2014)

However, while the administrative costs may be low, the time off work and legal assistance necessary may be the reason to add identity theft to your home insurance quotes whether you own a home, condo, or rent any dwelling.

Still, according to some reports, the actual financial cost of losses from identity theft/fraud might not outweigh the benefits of paying into an additional premium for identity theft protection, rather changing the current laws around identity theft and fraud and making breach notifications mandatory for financial and credit institutions.

It’s worth having a discussion with your employer about time off requests to handle and manage such an event. If you will lose money by being off work, then it may be worth adding it to your policy.

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The bottom line

As part of your home insurance policy, you might want to lean into plans that already offer protection as a baseline and opt out of ‘‘enhanced’ or ‘plus’ packages. As research suggests, you are more than likely to pay more out of pocket in premiums or time than you are recovering your losses. from incidents of identity theft/fraud. For this reason the best prevention and protection mechanisms are already embedded with most financial institutional plans and insurance packages and as always the best prevention is taking steps on your own to protect your privacy and identity today.