Recession Proof Living

Darcy asks: Would you purchase the identity theft ins. rider that’s offered on your home owners’ policy? Usually it’s about $25/year.

Maybe, depending on what level of service you’ll be getting.

Identity theft is a costly and increasingly pervasive problem, and the low cost of identity theft insurance makes it a tempting buy. But before you buy, it’s important to understand two important things about identity theft insurance:

• It can’t prevent identity theft from occurring.
• It doesn’t actually replace any stolen money.

The insurnce can only help cover the cost of cleaning up the mess once your identity is stolen. This typically includes reimbursement for postage, time off work, credit reporting costs, and other costs you will face as you fight to repair your good name.

Check the deductibles, and check into what additional services come with the policy. Will they handle the paperwork and phone calls for you, or will you do all the work and only be reimbursed for out-of-pocket costs? In many cases, the deductible is higher than your actual costs would be. It would take a lot of long-distance calls and copies at Kinko’s to reach a $250 deductible. . .but those are they types of expenses they generally pay for. But if the policy covers legal fees, you might get considerably more bang for your buck.

Consumer Reports recently reviewed identity theft policies and concluded that they weren’t worth the money for most people. This type of insurance ranks right up there with iPad insurance in my book (not very high, in other words). Like everything, though, the devil is is the details.