When shopping for insurance for your home, you expect to be offered coverage against water damage, fire, and natural disasters. However, there’s one that might come as a surprise – identity theft insurance.
While it may not be as immediately obvious or seemingly pressing as other types of coverage, identity theft insurance protects you from an invisible threat that can disrupt your financial well-being and shake your sense of security.
In this article, you’ll learn what identity theft insurance is, what it covers, who needs it, and how to purchase it – all essential information for making an informed decision about protecting your identity.
What Is Identity Theft Insurance?
Identity theft insurance is a type of coverage designed to provide financial protection if your identity or personal information is stolen. It is typically offered by home, condo, or tenant insurance companies as an additional type of coverage. While you are not required to have it, it is recommended that you consider it given that identity and personal information fraud accounted for 30.4% of all fraud reports made to the Canadian Anti-Fraud Centre in 2022, making it the most common type of fraud.
What Does Identity Theft Insurance Cover?
Identity theft doesn’t just disrupt your life, keep you awake with stress, or leave you feeling exposed. Beyond that, it can cost you hundreds, if not thousands, of dollars out of your own pocket to restore your identity.
Unlike your financial institution, which will reimburse you for fraudulent charges made without your consent, identity theft insurance typically covers a broader range of expenses you may not have expected, including:
- Professional Fees: Lawyers, notaries, and identity theft specialists
- Legal Fees: Costs associated with defending yourself against lawsuits, filing civil suits to recover lost funds, and other legal proceedings
- Document Replacement Fees: Expenses for replacing important documents like your passport, driver’s license, or Social Insurance Number (SIN)
- Banking Fees: Charges related to closing and reopening accounts, as well as obtaining new bank and credit cards
- Administrative Fees: Costs for notarizing documents, sending certified mail, and other administrative tasks
- Loss of Income: Compensation for wages lost if you need to take time off work to resolve identity theft issues
While insurance can’t prevent identity theft or fully alleviate the emotional impact, it can significantly ease the financial burden and give you peace of mind.
Who Needs Identity Theft Insurance?
Even if you take all the right precautions – shredding documents, using unique passwords, and steering clear of suspicious emails – identity theft can still happen to you. That’s because identity thieves are continuously adapting their tactics and finding new ways to exploit Canadians’ vulnerabilities. They don’t necessarily care about your age, where you live, or what you do, as long as they can obtain and misuse your information for their own gain, you could be a target.
On top of that, in today’s tough economic climate, the risk of identity theft and fraud is heightened. As the Head of Fraud and Identity Management Consulting at Equifax Canada points out, “Any time you see financial stress or an economic downturn, inevitably the motivation to commit fraud increases.”
All this is to say that everyone can benefit from the peace of mind that identity theft insurance offers. Granted, certain groups of Canadians are statistically at a higher risk of identity theft and might therefore want to consider it more seriously, including:
Young adults
Many believe that young adults are less susceptible to identity theft, but this misconception is far from the truth. In reality, 36% of fraud reports made by adults between 20 and 89, were made by adults under the age of 40. Coincidentally, this just so happens to also be the age group that’s least likely to be concerned about cybersecurity threats.
Social media users
Social media platforms, particularly Instagram and Facebook, are increasingly exploited by cyber criminals, with 78% of users believing these sites heighten their risk of identity theft. Not only that, but nearly half of users have seen more suspicious or fraudulent links on these types of platforms, with 18% even admitting to clicking on them.
Students
46% of students say they have been targeted more often since starting school. Among these university and college students, 30% admit they have never considered the risk of fraud, even though 44% are concerned about falling victim to a financial scam.
Seniors
Identity theft among seniors has become increasingly concerning in recent years. Between 2021 and 2022, the Canadian Anti-Fraud Centre reported a significant increase in these incidents, with 4,000 additional reports filed during this period. At the same time, the financial losses linked to these reports surged by $54.2 million compared to the previous year.
How Do You Purchase Identity Theft Insurance?
In Canada, you can purchase identity theft coverage through your insurance company or broker when you buy home, condo, or tenant insurance. Even if you decline it initially, you might have the option to add it to your policy later.
For example, when you receive an insurance quote from YouSet, all additional coverage options, including identity theft insurance, will be listed for you to choose from. Once identity theft coverage is selected, the price of your quote will then be automatically updated.
Next Steps: Buy Identity Theft Insurance for Less with YouSet
If you don’t want to risk bearing the full financial burden of a stolen identity, you might have already decided that identity theft insurance is worth it for you. If you’re still undecided, it can help to find out the cost of including it in your home insurance policy. With YouSet, that’s easy! In fact, you can get a quote for home insurance that includes identity theft coverage in just four minutes.