These days, homeowners' insurance policies cover more than your house - they can help you recover your identity.
Identity theft is the fastest-growing crime in the nation - 9.91 million victims in 2003, according to the Federal Trade Commission.
That has prompted some insurance companies to create a policy to help customers untangle the mess created when they have been fraudulently impersonated.
St. Paul Travelers claims to have been the first company to offer ID theft coverage in 1999, but the idea has not taken the world by storm. Since offering the policy in 2002, Farmers Insurance Group has seen 27,000 of its roughly 4 million homeowner customers take up the offer.
The slow adoption rate isn't stopping newcomers from joining the arena or offering upgrades.
At Allstate Insurance Co., which initiated coverage in July, victims can get more than money if their identity is stolen: They get someone else to clean up the mess. The product is available in only four states - Arizona, Texas, Illinois and New York - but the company plans to roll it out in more states.
"We will provide you with the experts to do the work of getting your life back," said Allstate spokesman Bill Mellander.
Not a bad deal, experts say, considering the average time for and cost of repairing damage caused by identity theft is about 600 hours and $6,000, according to the Identity Theft Resource Center in San Diego. The FTC has a more conservative estimate - an average loss of $500 per victim with 30 hours. "It's terrible, terrible tedious work," said Carolyn Gorman, vice president of the Insurance Information Institute in Washington.
But Linda Foley, who helps head up the Identity Theft Resource Center, called ID theft insurance a "buyer beware" product. "It's a personal choice," Foley said. "And there are vast differences from one policy to another."
Here's a rundown on ID theft protection insurance:
How does it work? You'll find that most companies will offer ID theft coverage as part of a homeowner's, renter's or condo insurance policy. You may find a stand-alone product that is being offered through your employer or your credit-card company, but read the fine print and make sure it includes benefits you can really use. Remember that you are generally responsible for the first $50 of unauthorized credit-card charges, but some card issuers won't make you pay anything.
Coverage. Look for an insurer that reimburses you for the cost of making long-distance calls, sending certified mail and notarizing affidavits, as well as attorney fees and loan fees if your application was rejected because of damage created when someone else ruined your credit history.
The biggest selling point is whether the policy will reimburse you for lost wages while you take time off work to chase down documents, meet with law enforcement officials or make phone calls. If you are a stay-at-home mom, find out whether the insurer will reimburse you for child care if you choose to hire someone to look after your kids while you are on the phone with creditors or making trips to the post office.
There is a cap to expenses. Total costs are restricted to $15,000 at Farmers and St. Paul Travelers and $25,000 at Allstate and Chubb Group Insurance Cos. There is also a limit on how much you can recoup in lost wages.
The fear factor makes some people sign up even if the benefits aren't especially good. "There are a lot of people who really do want peace of mind any way they can find it, and this is one of those ways," Gorman said. "Some people are very risk-averse."
Cost. Some companies, such as Chubb, won't charge extra for ID theft coverage. Others may charge as much as $40 a year, and Foley recommends that you not pay more than that.
Deductible. You could face some out-of-pocket costs before you get reimbursed. Chubb has a $500 deductible, and St. Paul Travelers has a $100 deductible. Farmers and Allstate do not require a deductible.
You'll want to weigh the possible cost of clearing your name and how much you might lose in wages against the deductible. If you make $20 an hour and it takes you 10 hours to straighten things out, a $250 deductible won't help you recoup your lost wages.
Lorene Yue is a Your Money staff writer.