Identity Theft Insurance, What It Covers, When You Need It, and How to File a Claim
Identity theft can derail your finances, ruin your credit, and create a bureaucratic nightmare. The average identity theft victim spends over 100 hours and $1,343 out of pocket restoring their identity, according to a 2023 Javelin Strategy report. Fortunately, identity theft insurance can help ease the financial and logistical burden. But what exactly does it cover—and is it worth it?
This comprehensive guide explains what identity theft insurance is, the differences between homeowners policy endorsements and standalone coverage, how to choose the right policy, and what to do when filing a claim.
Table of Contents
I. What Is Identity Theft Insurance?
Definition and Purpose
Identity theft insurance, also called identity fraud reimbursement, helps cover the out-of-pocket costs you incur when recovering from identity theft. These include:
- Legal fees
- Lost wages
- Postage and notary costs
- Certified mail
- Restoration services (fraud specialists or private investigators)
- Document replacement
It does not typically reimburse stolen funds—those are usually covered by your bank or credit card provider under fraud protection policies.
Major Providers
Leading companies offering identity theft insurance include:
- State Farm
- Nationwide
- Travelers
- LifeLock
- IdentityForce
- Aura
- Identity Guard
Some offer it as a standalone product, while others provide it as an add-on endorsement to homeowners or renters insurance.
Related article: Can Someone Steal My Identity if I lost My Wallet?
II. Homeowners Insurance vs. Identity Theft Coverage
What Standard Homeowners Policies Cover
A traditional homeowners policy does not cover identity theft. It focuses on tangible personal property (e.g., electronics, furniture) and physical theft or damage from events like fires or break-ins.
Some limited coverage exists for:
- Cash or wallet theft at your residence (usually $200–$500)
- Liability for bodily injury or property damage—but not for identity fraud
Why Identity Theft Isn’t Covered
Homeowners insurance is designed for “first-party property” loss—not intangible financial crimes like fraudulent credit card use or loan applications.
III. Identity Theft Endorsements for Homeowners Insurance
You can usually add an endorsement to your homeowners, renters, or condo insurance for identity theft protection.
What It Covers
| Expense Type | Coverage Includes |
| Restoration Services | Fraud specialists, private investigators, case managers |
| Lost Wages | If you take unpaid time off work to handle identity recovery |
| Legal Fees | For court appearances or clearing your name |
| Notary/Postage Fees | Mailing affidavits and supporting documents |
| Document Replacement | Passports, Social Security cards, driver’s licenses |
| Credit Monitoring | Alerts for unauthorized inquiries, changes of address, and dark web scans |
| Child/Elder Care | Reimbursement for substitute caregivers while you handle recovery tasks |
Coverage Limits and Deductibles
- Limits: Typically $15,000 to $25,000 per year
- Deductibles: Often $0, though some carriers charge $100–$250
Cost
- Annual Premium: $25–$60/year (about $2–$5/month)
- Factors That Influence Cost:
- Location (e.g., high-crime areas)
- Chosen coverage limits
- Insurance provider
- Location (e.g., high-crime areas)
How to Add an Endorsement
- Review your current homeowners policy
- Contact your insurer or agent
- Request an “identity theft endorsement”
- Sign the endorsement form
- Verify coverage in your updated declarations
- Confirm waiting periods (typically 30 days before benefits apply)
Interaction with Other Policies
- Umbrella Insurance: Usually does not include identity theft, but you may get discounts if bundled
- Renters & Auto Policies: Some insurers offer similar identity theft endorsements for these
- Cyber Insurance: Distinct from identity theft insurance—focuses on device breaches and ransomware
IV. Standalone Identity Theft Insurance
When to Consider Standalone Coverage
- You don’t own a home
- You need higher limits ($100K–$500K+)
- You want robust digital security and monitoring tools
Comparison of Top Standalone Providers
| Provider | Annual Cost | Coverage Limit | Key Features |
| Aura | $80–$120 | $100,000 | Dark web scan, VPN, crypto monitoring |
| LifeLock | $150–$200 | $1,000,000 | Bundled with Norton 360, device protection, bank takeover alerts |
| IdentityForce | $100–$130 | $250,000 | Child ID monitoring, device scanning, dark web alerts |
| IDShield | $70–$90 | $100,000 | Family plans, VPN, $1M stolen funds insurance (with subscription) |
| Norton LifeLock | $120–$160 | $1,000,000 | Antivirus, credit monitoring, SSN trace, social media scanning |
Eligibility and Requirements
- Credit Score: Minimum often 600–650
- Criminal History: Past fraud convictions can disqualify you
- Residency: Must live in the U.S.; some states (like TX or MA) may have limitations
Additional Benefits
- VPN & Antivirus Bundles
- Password Managers
- Emergency Cash Advances
- Family Identity Monitoring
- Credit Freeze Assistance
V. How to File an Identity Theft Insurance Claim
1. Notify Authorities and Your Insurer
- Contact your insurer immediately (within 30–60 days)
- File a police report detailing how your identity was stolen
- Submit an FTC complaint via IdentityTheft.gov
2. Collect Documentation
| Document | Purpose |
| Police Report & FTC Complaint | Confirms the crime occurred |
| Proof of Financial Loss | Bank/credit card statements, collection letters |
| Sworn Statement of Loss | Notarized affidavit explaining the theft and costs |
| Receipts & Invoices | Restoration expenses—legal, mailing, phone, credit report fees |
| Proof of Lost Wages | Pay stubs or employer letter confirming unpaid leave |
3. Submit the Claim
- Use your insurer’s online portal or paper form
- Attach all documentation
- Follow up with your claims adjuster or agent
- Track reimbursements and resolution progress
Final Thoughts: Is Identity Theft Insurance Worth It?
Identity theft insurance won’t replace stolen money, but it can save you thousands in legal and recovery fees—and spare you the headache of handling the process alone. It’s particularly valuable if:
- You want professional restoration support
- You travel often or manage sensitive financial data
- You’re responsible for children or elderly family members
Whether you add an endorsement to your homeowners policy or buy standalone coverage, identity theft insurance can offer peace of mind and financial relief when your personal data is compromised.