Do I Need an Identity Theft Insurance Policy?

identify theft using laptop
May 29, 2015

The headlines are awash of late with news that more people than ever before have fallen victim to identity theft, with worrying figures having just been released supporting this claim. According to data from the fraud prevention service, CIFAS, some 34,151 cases of identity fraud were reported during the first quarter of 2015, with 80% of these instances attempted in an online environment. Breaking these alarming stats down still further and it emerges that of the confirmed cases information was being obtained via credit cards (14,103 cases) and bank accounts (9,349), which contributed to the sum total of identity theft being up a massive 27% on the same time the previous year.

There’s no disputing the fact that cyber-crimes are on the increase and remain amongst the biggest single threats to society in 2015. On the bigger stage there’s the clear and present danger posed by hackers attempting to topple governments, drain company coffers and orchestrate unimaginable acts of terror, yet much closer to (all our) homes is the threat of nefarious individuals and organised groups trying to gain and forge our very own identities for purely duplicitous means to acquiring ill-gotten financial gains at our personal costs.

Admittedly while there’s little most of us can do to avert the more far-reaching threats outlined above, there are however a number of preventative measures we can adopt and subsequently implement (more of which later) to counter identity fraud and ultimately put a halt to the criminally intent as they go about maliciously assuming our otherwise unique in a virtual context. Indeed it’s within this online framework where they then have seemingly unlimited access to our monetary savings as well as being in an ideal position to make purchases of goods and services in our names. One of these safeguarding protocols ISN’T taking out an identity theft insurance policy though, as in the majority of cases they’re not worth the paper the policy documentation is printed on.

Habitually ID Theft Insurance Policies Do Little to Instil Peace of Mind and Potential Recompense in Eyes of Experts

Essentially providers of these types of insurance policy are being accused of preying on the insecurities and fears of consumers desperate to protect their financial assets from falling into the wrong hands, and are often employing somewhat dastardly means by which to lure the unwitting into signing up for policies which offer very little in return for regular premium payments. For instance if you’ve taken out a new credit card or set-up a new current account in recent times you may have bombarded with information about the benefits of purchasing an identity theft insurance policy, but these rarely make any fiscal sense when you look into them and their supposed pros. For a start protection policies offered by your bank in direct relation to your card/account tend to represent far better value for money and coverage per se, with these on average setting consumers back in the region of £30 a year. Compare this figure to identity theft insurance plans costing around £70 per annum.

Identity theft insurance policies are routinely promoted as affording the policyholder access to their credit reports, however a little research confirms that there are three predominant credit referencing agencies operating here in the UK, and any ID theft insurance plan will only ever grant you access to one. Besides which anyone can be granted access to this personal data either online or by post for the princely sum of around £2 per credit referencing agency. Elsewhere and irrespective of the loss cover sums being bandied around by ID theft insurance policy providers should you be the victim of fraud, the simple fact of the matter is most of us already have free cover under the guise of the Banking Conduct of Business Rules and the lending code. Under these terms and conditions – and with liability capped at £50 – most of us have inadvertently got insurance for losses arising from ID fraud in place. And let’s remind ourselves that £50 is still less than the £70 typically associated with ID theft insurance packages.

What’s more, or rather less, much less even, you could end up signing up for less ID theft insurance than you already have covered by the aforementioned banking regulations for losses resultant from a lost or stolen card. However the exclusions on some of these identity theft insurance plans mean that in real terms policyholders might easily be forking out more to receive less than their statutory protection is worth in this scenario. In the event of losing a card (and your PIN being used), the likes of Barclays, HSBC and Lloyds TSB all restrict the pay-out they’ll offer to between £50 and £100. Yet under the banking rules we’ve outlined above – and unless you’ve been negligent in any way – the top rate you’d be expected to stump up is just £50.

ID Theft Cover Is Historically Misconstrued By Would-be Policyholders As Experts Are Keen To Highlight


For those uninitiated – and to clarify a common misconception – ID theft insurance DOESN’T cover (or therein, recover) monies stolen by criminals who have done so by stealing your personal information. In essence an identity fraud insurance plan exists purely to cover the cost of repairing a damaged credit report and this DOESN’T include any of your funds which fraudsters pilfer. More normally ID theft insurance protects victims of fraud for any losses incurred as direct result of an application for credit that’s been turned down subsequently falling into the wrongs hands. This is the long and short of it. Usually comprising costs associated with legal representation, time off work, travel expenses and sending documents by registered post. Consumer watchdog and go-to folk for customer championing, has unearthed figures which suggest that a mere 3% of their members with ID theft cover have ever claimed.

As we have already established, identity theft occurs when those of a criminal intent steal enough sensitive personal data belonging to us so as to effectively impersonate you. Actions which often have grave consequences in as much as they can clear your bank account and/or run up huge debts in your name.and all the while the victim remains blissfully ignorant of what’s going on behind the screens scenes. One of the first steps we can all take to minimise the chances of having our ID’s used nefariously without our knowledge or consent is to be extra vigilant. This in itself is far more beneficial (and cost effective) than paying an insurance company for any ID theft insurance policy. Measures we can all take include:

  1. Shred and dispose of sensitive paperwork/information – Without question one of THE most important things we can all do. Ideally look to shred all financial statements, loan and credit card offers and catalogue account details which are sent to you in the post before you bin them. Home shredders are cheap to buy and make a sound investment in the fight against ID fraud and eradicates the outstanding risk of thieves discovering anything useful should they go rooting through your rubbish, as if often the case, employing a practice commonly known as ‘bin-raiding’.
  2. Look over your statements with a fine toothed comb – Many of us just afford our bank statements the most cursory of glances when they drop through our letterboxes (or alternatively requested via our online banking platforms), when instead we should really pore over every credit and debit column to determine that nothing sets alarm bells ringing. Unexpected entries tend to be the first indication we have that someone is assuming our identity in an online environ, which we can then act upon.
  3. Sign-up with a credit report company – As touched on previously, instigating membership of the likes of or should always be considered to add a further layer of protection to your assets, as it’s companies of this ilk who’s business it is to keep their members up to date with all aspects of their credit scoring/referencing position. A credit report is widely acknowledged as being one of the most effective tools in the war against identity theft, backed by the government, which affords the subscriber an immediate snapshot of their borrowings and repayment records as and when requested.
  4. Be Careful when social networking – It’s crucial that we don’t let our guard slip whilst keeping in touch with friends and family on Facebook, Instagram and Twitter, as there’s inherent danger waiting if you reveal too much about yourself on these hugely subscribed to websites. The ever-present threat comes courtesy of our names, dates of birth, nicknames and children’s and pet’s names we frequent when we innocently create and revise our online profiles. Yet time after time the seemingly innocuous information we provide as our ID for PINs and virtual passwords are regularly targeted by fraudsters, knowing that users often plump for the easier rather than safe option in these circumstances.
  5. Be Vigilant With Your Post – Alert the Post Office immediately if you’re expecting mail which doesn’t arrive after a certain passage of time, as the chances are as someone could be intercepting it without your knowledge, more so if you reside in a communal building where your mail is delivered. Particular care and attention to details is paramount when you relocate too, and it’s recommended that those who move house facilitate the Royal Mail’s Redirection Service to ensure that your post is forwarded to your new postal address for a reasonable period thereafter.
  6. Register To Vote At Your Current Address – Financial lenders historically plunder the electoral role to ascertain that you reside where you say you do, and if you’re not registered to vote then this makes it all the more inviting for those of a criminal persuasion to register as you at a previous address. Therefore we’d strongly urge people to de-register at previous addresses when relocating and re-register at your new one. By seeing this through, it then makes it impossible for people who then take residence at your former home to pass themselves off as you.
  7. Don’t keep important paperwork about your person – You’d be surprised at the amount of people who carry their driving license, passport and credit card with them at all times of day and night. As keenly pointed out by leading anti-personal fraud experts, we should only ever conceal them about our persons when we knowingly need to present them for a specific occasion so as to reduce the possibility of them falling into the wrong hands. On a similar topic, it’s never good form to write down PINs or passwords, because in the event of your bag/wallet being misplaced or stolen the chances are you could be unwittingly handed thieves your identity as well as your cash.
  8. Register with CIFAS – By arranging ‘protective registration’ with the UK’s primary fraud prevention service for less than £15 per year, alerts will be automatically placed against your name should you report your passport or driving licence stolen. If an application is then made in your name to a CIFAS member, CIFAS will carry out extra checks to make sure the application is genuine. Standalone registration is also available from£14 per annum.