What is an identity protection plan?

If your identity is stolen, identity theft insurance helps cover out-of-pocket expenses associated with restoring it. Covered expenses may include legal or administrative fees you need to pay for when restoring your identity. Identity theft insurance may also include remediation assistance to help you restore your identity after it’s stolen.

Keep in mind that identity theft insurance typically comes into play after your identity is stolen. It doesn’t include proactive services that can alert you to potential identity theft issues in the first place.

An identity theft protection plan may offer both proactive identity monitoring services as well as remediation assistance and coverage for identity theft expenses. While plans vary by provider, the following services may be included:

Credit and Dark Web Monitoring

If your plan provider offers credit monitoring, they’ll likely keep an eye on things like your credit report, change of address records or credit card and loan applications, says the Federal Trade Commission (FTC). If they find any new or suspicious activity, you’d then receive an alert.

Your plan provider may also monitor things like the dark web and will alert you when personal information is found (such as your phone number or email address). These alerts may give you the opportunity to get ahead of identity thieves. For example, if you take initiative to change passwords on accounts that use your email address.

Identity remediation

Identity remediation services are helpful if your identity is stolen. Identity theft can cause harm to your credit and reputation, which can take a lot of time and money to repair, says the Insurance Information Institute (III). Some identity theft protection providers will assign a remediation specialist to help restore your identity.

Expense or stolen funds reimbursement

An identity protection plan may also help pay for fees associated with restoring your identity, such as:

• Administrative fees (such as postage or notary costs)
• Legal fees
• Lost wages (for example, if you need to take time off of work to restore your identity)

You may also find that some plans provide reimbursement for funds stolen as a result of identity theft (for example, money stolen from your savings account). However, keep in mind that not all plans will reimburse you for these types of direct losses.

You should also remember that purchasing an identity protection plan will not prevent your identity from being stolen in the first place. But, it can help alert you to a potential identity theft problem before it gets worse and help you restore your identity if it’s stolen.

To help safeguard your information, consider taking steps to help avoid identity theft, such as only making online purchases through secure websites and learning to recognize phishing scams, says the III.

Identity theft can happen to anyone, and the FTC says victims usually need to take several steps to recover. If you’re concerned about keeping your personal information secure, you may want to consider buying an identity theft protection plan.

When you are ready to purchase an identity theft protection plan, take time to understand what the plan covers. To help accomplish this, it may be a good idea to ask a plan provider the following questions, says the FTC:

• What websites or reports do they monitor?
• What types of monitoring services do they provide?
• How often will they be monitoring for your information?
• What personal information do they need from you to start monitoring your identity?
• Do they provide expense or stolen funds reimbursement for losses stemming from identity theft?
• Are there any additional services or fees you should be aware of?

You may be able to purchase identity theft insurance or a protection plan in a few ways:

1. Through your homeowners or auto insurance carrier.

Identity theft insurance: Some insurers offer identity theft insurance as an endorsement on your existing homeowners, renters or auto insurance policy. This type of insurance is sometimes referred to as identity restoration coverage.

Identity theft protection plans: Your insurance carrier may also offer a separate, standalone identity protection plan. For example, Allstate offers Allstate Identity Protection to help safeguard your personal information and restore your identity if it’s compromised.

Since identity theft insurance and identity protection plans offer different types of coverage or features, it’s a good idea to ask your insurer what services are included so you understand what is (and isn’t) covered.

2. Through a standalone identity theft protection company.

You may be able to purchase identity theft protection plans through a standalone identity protection company. Remember, these plans may give you access to a broader range of services, including proactive monitoring and remediation services.

If you purchase an identity restoration coverage endorsement on your existing homeowners insurance policy, for example, your policy’s premium will likely increase. Be sure to review your policy documents and work with your insurance provider to understand the price you’ll pay for this added coverage.

The cost of an identity theft protection plan also depends on the type of plan you choose. Some companies offer tiered plans for different monthly rates. For example, you might find that a higher tiered service plan includes extra monitoring or remediation services (such as monitoring services for more than one credit bureau). This means you might pay more for a plan that offers a wider variety of services.

Remember, buying identity theft insurance will not prevent your identity from being stolen. But, it can help provide you with some peace of mind when it comes to addressing potential identity theft problems before they get worse.