Does Homeowners Insurance Cover Identity Theft and Cybercrime?

Identity theft and personal cyber coverage are not automatically included in every homeowners policy. They can be added to many policies through endorsements that provide coverage and professional help after certain identity theft or cyber events.

And this is about more than getting a fraudulent credit-card charge reversed.

Your bank or credit-card company may take care of an unauthorized transaction. That doesn't necessarily tell you what other information was compromised, secure your other accounts, restore your identity, or help with the time and expense involved in putting everything back together.

What can identity theft coverage help with?

Identity theft coverage can help with expenses involved in restoring your identity and give you access to professionals who help work through the recovery process. Depending on the endorsement, that can include help determining what was compromised, dealing with creditors or institutions, replacing documents, and handling other covered restoration expenses.

What does personal cyber coverage add?

Personal cyber coverage can extend protection beyond traditional identity theft. Depending on the endorsement, it can address things such as certain online fraud, cyber extortion and other covered cyber events.

For example, if someone gains access to an account and tricks you into sending money, or someone takes control of an account or device and demands money to give it back, those aren't necessarily the same problem as somebody opening a credit card in your name.

Is identity theft coverage the same as personal cyber coverage?

No. They're related, but they address different exposures. Identity theft coverage focuses on restoring your identity and covered expenses that come with that process. Personal cyber coverage can address additional cyber events such as certain online fraud or cyber extortion. Some insurers package the protections together; others offer different coverage options.

Can identity theft coverage protect my children too?

Coverage for children depends on who the endorsement defines as an insured. If you're buying the coverage to protect your family, check whether minor children are included and whether there are any age or residency requirements.

Will it reimburse fraudulent charges?

Your bank or credit-card company may reimburse unauthorized transactions. Personal cyber coverage can address other covered financial losses and recovery expenses, depending on the endorsement. Check exactly how the policy defines online fraud and what limits apply.

What is cyber extortion coverage?

Cyber extortion involves someone using a cyber threat to demand money from you. An example is someone taking control of an account, device or data and demanding payment. Personal cyber endorsements can include coverage and professional assistance for covered cyber-extortion events.

Does personal cyber insurance cover damage to my computer, phone or data?

Some personal cyber endorsements include coverage for certain device or data-recovery losses and some don't. Check whether your endorsement includes systems restoration or data recovery, what devices qualify, and whether a separate limit applies.

If you're comparing identity theft or personal cyber coverage, don't stop at “Do I have it?” Ask what events are covered, who in your household is covered, what professional help is included, what expenses are reimbursed, and what limits apply.

You may decide you don't need it. But I'd rather you know what protection is available before you're trying to put the pieces back together after your identity has been stolen.