Breach Protection Services: What are the differences?

If you’re one of the millions of Americans whose personal information has been part of a data breach over the past few years, you’ve probably received a letter, notifying you of the breach and offering some kind of identity protection free of charge. If you are offered free identity protection, whether due to a breach or by an organization you belong to, by all means, sign up! Dealing with identity theft is time-consuming and stressful, as we discussed in a recent post. What does the free identity protection really get you? Is it enough or should you consider supplemental coverage? To help you decide, here’s a quick overview of the types of identity protection and what they provide.

As the Federal Trade Commission points out, there is no identity protection service that can prevent identity theft. Depending on what’s included, identity protection services can help you discover identity theft sooner and recover from it quicker and with less hassle. There are three basic kinds of identity protection.

Here’s the lowdown on each of them:

• Identity monitoring: Monitoring services scan for signs that your personal identity is being misused and notify you of suspicious activity. Many monitor credit bureaus for activity on your credit report. Some also monitor online public records, social media, and other sources, and a few even scan the Dark Web to see if your personal information shows up for sale on the black market. Some specialized services can notify you of activity on your medical insurance ID, which can protect you from potentially life-threatening medical identity theft.
• Identity recovery services: Recovery or resolution services help restore your identity after it is stolen. The amount of help offered varies widely from services that will give you a brochure on fixing your own identity to services like MyIDCare where an expert recovery advocate manages your case on your behalf, working with financial institutions, medical providers, credit bureaus, and law enforcement to clear your name and restore your identity to pre-theft condition.
• Identity theft insurance: This is perhaps the most misunderstood form of identity protection. Some providers will hype “up to $1 million in fraud insurance,” which sounds like they will cover your financial losses to identity thieves. In fact, this coverage reimburses your out-of-pocket costs to recover your own identity. The FTC says that most only cover costs like postage, copying, and notary fees, which typically amount to a few hundred dollars or less. Only a few cover larger costs such as lost wages or legal fees.

Millions of Americans fall victim to identity theft every year, and it can impact your life deeply, affecting your access to a job, a home, or even medical care. Your odds of identity theft in a given year are now over 1 in 20. That’s 50 times the odds of having a house fire and over 600 times the odds of dying in a car crash. Most of us would never go without fire or home or auto insurance, and with the rising risk of identity theft, it may be time to consider coverage for your identity as well.