The value of identity theft insurance has been much debated. With identity theft on the rise throughout the United States, it makes sense to do something to protect yourself. On the other hand, there are things you can do on your own to protect yourself.
Under most circumstances, credit card companies and banks cover you against direct losses from identity theft or fraudulent use of your credit cards. Just because you have identity theft insurance doesn't mean your credit record will be repaired.
Identity theft insurance comes with pretty low monthly premiums. This type of insurance pays for the expenses associated with cleaning up your credit record. In some cases, it can take months on end to remove errors in your record due to the activities of identity thieves. The FTC estimates to cost of cleaning up your credit record from identity theft to be around $1,000 on average.
Rather than paying for identity theft insurance, you may want to consider paying for a credit monitoring system. Many of the online monitoring systems offer e-mail alerts whenever your credit report indicates an application for a new line of credit or other significant changes. Some monitoring services also provide e-mail alerts when errors to your credit report have been corrected. A credit alert from a monitoring service is also a great way to track positive changes to your credit report.