Does Insurance Cover Identity Fraud?
“Identity fraud occurs when someone uses stolen personal information to commit a crime or fraud in your name. Once the damage is done, the road back to restoring what was yours can be both time-consuming and expensive. As the first insurer to offer reimbursement for identity fraud expenses, Big Insurance Company (name omitted to protect the guilty) can help you repair the harm that’s been done.”
Those 58 words carefully crafted by a creative person or ad agency, GIVE. Those words would lead someone to believe that he or she has coverage for what has become the fastest growing crime in America: Identity Theft. Identity theft statistics show approximately 15 million United States residents have their identities used fraudulently each year with financial losses totalling upwards of $ 50 billion. (http://www.identitytheft.info/victims.aspx)
It would be an astute business decision for an insurer to decide such losses belong in their offering portfolio. After all, insurance is a tool to eliminate, minimize or otherwise share risk. Policies are purchased when insurance consumers see the possibility of loss and an insurer enters the insurance market to provide such policies.
However, as is often so prevalent in the marketplace, sometimes the red apple we purchase turns out to be a yellow lemon or a green lime. Please consider the small print of the policy that TAKETH AWAY from the glowing promises in the advertisement:
“We will reimburse up to $ 25,000.00 for ‘expenses’ incurred by an ‘insured’ as the the direct result of any one ‘identity fraud’. This coverage applies to any one ‘identity fraud’ discovered during the policy period.”
Losses in excess of $ 25,000.00 simply are not covered at all. The maximum an insured could expect to recover is capped. Further, expenses under the Identity Fraud Endorsement are defined as:
1. Costs for notarize fraud affidavits or similar documents.
In Arizona notary fees are capped at $ 2.00 so it would seem that payouts for this time of claim would not bankrupt the insurer.
2. Costs for certified mail to healtcare providers, merchants, law enforcement and credit granters. That could easily ad up to fifty dollars.
3. Lost wages capped at $1,000 a week for up to five weeks.
4. Loan application fees.
5. Reasonable attorney fees incurred with the insurers prior written consent.
“Reasonable attorney fees incurred” comes with a caveat: “with our prior written consent”. Caution must be made before proceeding. I am currently working on just such an incident where permission was granted over the phone to retain counsel but was not put in writing.
6. Charges for long distance telephone calls. Such a promise helps me recall when I didn’t have a cell phone which provided a minute rate for calls or when my home phone provider didn’t give me this service for free.
7. Costs for day care capped at $ 1,000 per week for up to five weeks.
8. Travel costs for travel and accommodations capped at $ 1,000 per week for up to five weeks to participate in the DEFENSE of lawsuits, challenge accuracy or completeness of credit information, participate in criminal prosecution, filing affidavits, etc.
9. Fees for re-issurance of government i.d. such as passports
10. Fees charged for copies of medical records.
Perhaps there is some coverage here for you in areas 1-4 and 6-10 although I would think it would be minimal. The one area where we thought we had agreement (5), in our case. Perhaps, however, the words conveying permission for attorney fees, might take precedent here.
Fortunately there is no deductible.
Before proceeding with a claim, we must address the definition of “identity theft” itself. Identity theft implies someone has acquired a person’s personal information for personal their own financial gain. If there is no attempt for financial gain by the evil-doer stealing your identity, there will be no coverage.