If you are a victim of
identity theft, putting your affairs back in order can take many months and thousands of dollars. But a growing number of insurance companies now offer identity theft expense coverage to help ease the pain — and costs — involved.

Four Canadian insurers currently provide coverage — Allstate Insurance Co. of Canada, Chubb Insurance Co. of Canada, Dominion of Canada General Insurance Co. and ING Canada Inc. The British Columbia Automobile Association also offers coverage through BCAA Insurance Corp.

The coverage is usually a rider on a home insurance policy and covers, within limits, such expenses as lawyers’ fees, the cost of credit reports, affidavit authorizations, long-distance calls, loan reapplication fees and lost income for time off work needed to sort out the mess. None of the policies covers title or mortgage fraud; that’s covered by title insurance, available through lawyers.

In September, ING Canada, the most recent company to offer identity theft expense coverage, launched My Name Identity Theft Assistance Plus as an add-on to its homeowners’, tenants’ and condominium policies.

“Identity theft is a significant and growing problem in this country,” says Bryan Seaton, ING’s manager of external communications. “Canadians are very concerned about it and we hope this will give them some peace of mind.”

In addition to covering the usual expenses, such as legal fees and associated costs, says Seaton, “We help to resolve the problem by providing a 24/7 assistance line. A representative is available to answer questions and guide customers through the process of restoring their good name, including dealing with credit card companies, credit rating agencies and banks. They can also make referrals to lawyers, notaries and other professionals, as needed.”

ING will also provide up to $500 per day, to a maximum $5,000 per year, for lost income. “That’s important because people spend an average of 40 to 50 hours dealing with these situations,” says Seaton.

In total, ING will provide up to $25,000 in expense reimbursement per year for a cost of $30. There is no deductible and a claim won’t impact the policyholder’s claims-free discount in others areas of home and auto insurance.

Identity theft is a multi-million-dollar problem in Canada. According to PhoneBusters, the Canadian anti-fraud call centre that handles consumer fraud complaints, 11,231 Canadians were victimized in 2005, with total losses exceeding $8.5 million. Since 2002, identity theft has affected almost 50,000 Canadians, with losses exceeding $100 million.

“Surveys indicate that one in five Canadians has been victimized by identity theft or knows someone who has, while 54% have identified it as their No. 1 personal privacy concern,” notes Derek Tupling, manager of external affairs with Allstate Canada.

Allstate’s identity theft expense coverage, which is available as a rider to homeowners’, tenants’ and condominium policies, provides up to $15,000 per year for financial and legal assistance to help restore a customer’s credit and good name. That includes the cost of credit reports, affidavit authorizations, long-distance calls, fees required to reapply for loans denied as a result of identity theft, lost income for time off work, and lawyers’ fees and disbursements required to deal with associated legal disputes.

It also covers legal assistance, including toll-free access to telephone consultations with a lawyer who will work with the customer throughout the restoration process. There is no deductible and a claim does not impact the policyholder’s claims-free discount in other areas of home insurance.

“We’re offering this coverage free for one year to customers who buy a new policy or switch to Allstate by Oct. 21,” says Tupling. “For existing customers, the cost is $35 annually.”

More than 6,000 Allstate customers currently have the coverage; there have been no claims since the company began offering it in July 2005.

Dominion of Canada General Insurance recently announced the inclusion of identity fraud expense coverage in homeowners’, tenants’ and condominium policies at no charge.

CEO George Cooke says identity theft is still a relatively rare occurrence, so the cost to Dominion is likely to be minimal. Recovering one’s identity, however, can be expensive and time consuming.

“This is something people worry about,” he says. “We want our policyholders to have the comfort of knowing that, if it happens to them, their policy will provide the funds to hire the professionals they need.”

@page_break@Dominion covers the cost of no-t-arizing documents and affidavits, registering mail, loan application fees, and up to $250 a day to a maximum of $10,000 for lost work time. It also covers “reasonable” lawyers’ fees.

“There’s a huge amount of paperwork and expense involved in reclaiming your identity and our product helps to take the worry out of the process,” says Dominion vice-president Brigid Murphy.

Dominion provides up to $25,000 per occurrence, with a $250 deductible. There is no annual limit and the first claim doesn’t count against a policyholder’s claims-free discount.

The BCAA’s 2005 decision to offer identity theft was based on personal experience. “Our underwriting manager had two experiences of identity theft affecting friends and family so we saw a real need for it,” says Brooke Hanson, product manager, home insurance, BCAA Insurance.

The insurance, which is available as an add-on to homeowners’ policies, provides $10,000 of coverage for $40 a year, with no deductible. It covers the cost of long-distance phone calls, notarization, registered mail, loan and credit card reapplications, and legal costs if the policyholder is sued.

To date, 2,000 people have purchased the coverage and BCAA has processed fewer than 10 claims. In the new year, BCAA plans to introduce two levels of coverage: $30,000 for $40 annually and $10,000 for $25. BCAA is also considering a stand-alone product for those who don’t have homeowners’ insurance with the association. IE