Huh, what does identity theft insurance cover? And how much does it cost?

/likes insurance

If no one wanted identity theft insurance, no one would be selling it. I wouldn't buy it myself, but in general offering people ways to mitigate risk is no bad thing. According to this, at the moment identity theft insurance is not implemented very well, but I imagine in future the coverage will improve and the price will come down as the industry acquires more data and uncertainty is reduced. From the seller's point of view, I imagine identity theft insurance is quite a difficult product to price, because the extent of moral hazard (the tendency of people to take more risks when insured) is very hard to quantify.

If it's anything like the cover offered in the UK, TPS, it's not worth having because the cover is restricted to a very specific set of circumstances.

The US versions I have researched are more packages based around monitoring your own credit rating with complete access to all your files on the big 3 credit reporting services.

For a (big) price, they make it easy for you to fix your credit reports, especially your history of residence. My initial reports had over 30 address mistakes of every imaginable type. According to one entry, I worked for my brother's employer. Another listed a university credit union in North Carolina (SSN typo). A third claimed I owed Maryland one year's state income tax (turned out to be a US Postal Service mistake*, of all things). Even my ex-wife's dentist.

One reason identity theft is possible is because virtually everyone's reports are such a mess. Blame it on a legacy of non-standard computerized collection and storage methods.

*This is really too good not to relate. The Post Office forwarded a letter from the IRS to a post office box I was using in Maryland. It bore one of those "After 10 days, return to ...", and since I only checked my mail there every few weeks, it went back to the IRS, bearing the POB address. The IRS changed my address in its database to the Maryland POB.

Then the next tax season and long after I stopped using the POB, the IRS sent Maryland all my tax information, and Maryland thinking it had a new resident sent out a tax bill when they didn't receive a return.

This all happened in 2002. I discovered it in 2005, and the back-and-forth with Maryland took about a year to straighten things out.

Addendum: The bottom line is keeping your credit report up-to-date makes identity theft extremely difficult. Also, knowing you have an excellent credit score is not enough. For all you know, you may be riding someone else's coattail.

I'm not bothered about identity theft. If someone stole my identity, that would give me a chance to try being someone else. Which would have to be an improvement.