Description of an identity fraud claim: Our customer (Jim) is an airline pilot and goes on trips for three days at a time on a regular schedule. A crook notices this and checks his mailbox. When the new order of checks arrives the crook steals them and, having already stolen the bank statement, knows when the company deposits his check. The crook goes on a spending spree and empties Jim's account.
When Jim gets home he sits down to pay his bills. He pays for his house and car insurance, his life insurance and his credit cards. Jim goes back out on a trip. While he is gone, the crook takes the notices that his checks have bounced. This happens for a month or two.
Jim's insurance is cancelled and the replacement coverage is much more expensive since he has been uninsured. The credit card companies stop taking his charges which is very inconvenient when you are away from home at night. The mortgage company charges him late fees and all of the credit grantors in his life are reporting his bad checks (which he actually wrote...remember, the crook's checks cleared).
Jim's credit is a total loss in 30 days. What's worse, the thief later wrote bad checks, too.
We have recently been able to offer a coverage known as identity theft or identity fraud insurance. The need for this coverage arises when someone steals your name, social security number, drivers license number, checks or credit card information and begins using your credit as though they were you.
The insurance policy describes identity theft as "the act of knowingly using without authority, a means of identification of a covered person with intent to commit an unlawful act."
There are federal limits on how much the credit companies can hold you responsible for, when your credit ID is stolen. I believe that the limit is $50.00 per account. Your bank should not pay for checks which don't have a valid signature. So what could it really cost you to have an identity fraud claim?
1. Lots of time and effort to convince the banks and credit card companies that, in fact, a theft has occurred. Many people claim theft but in fact used the cards themselves.
2. Loss of credit credibility. The credit reporting companies and credit card companies won't voluntarily take the adverse credit off of your reports unless you can prove your fraud claims.
What does Identity Fraud coverage pay for?
1. Expenses that you have as a result of your claim.
2. Lost wages as a result of the need to correct the credit company records.
3.Legal fees which become necessary as a result of
a. Suits for collection from credit grantors or collection agencies
b. Removal of judgements or liens against you
c. Legal action necessary to have credit reports and other public records corrected.