Is identity theft insurance worth it?

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Identity theft is a growing problem
Why criminals target identities
What is identity theft insurance?
What does identity theft insurance cover?
Final thoughts: Should you buy ID theft insurance?

Think your personal information is safe? AI-powered scams and massive data breaches are changing the game, making identity theft more sophisticated—and more devastating. Scammers are exploiting stolen Social Security numbers, bank details, and even job applications to wreak havoc on your finances and your peace of mind.

Recovering from identity theft is stressful and it’s time-consuming and expensive. That’s where identity theft insurance steps in to cover the costs—but is it really worth it? Let’s break down how it works and how ExpressVPN’s Identity Defender goes beyond insurance alone to help you stay protected.

Identity theft is a growing problem

Identity theft happens when someone gets hold of your personal information—like your Social Security number, bank details, or login credentials—and uses it to commit fraud. With new digital tricks emerging all the time, staying protected is more challenging than ever.

Read more: What can someone do with a stolen Social Security number? 

Data breaches

Breaches pose a large-scale threat, with a 15% rise in reported cases in 2023 in the U.S. The average breach cost sits at around 4.45 million USD, reflecting the steep price that businesses and consumers face. Large sets of stolen data often end up for sale on hidden websites. Criminals then purchase personal information to open fraudulent accounts, apply for loans, or commit tax fraud.

A related problem involves “synthetic identity fraud.” Thieves fuse genuine and fake data to create new identities. With so much personal information exposed in data breaches, the chances of this type of fraud have significantly increased.

Once your details are out there, it’s important to limit further exposure. ExpressVPN’s Identity Defender includes a data-removal tool. It scans broker sites and people-search platforms to detect your information and submit requests to have it removed. By reducing what’s available publicly, you lower the chances that a scammer will strike.

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AI-powered scams

AI is changing how criminals operate. Cybercriminals and fraudsters use AI to trick potential victims at a scale and speed rarely seen before. Voice imitation software can reproduce a real person’s speech patterns, potentially fooling a relative or coworker. Criminals might pose as a family member who needs quick financial help or as a high-level executive instructing staff to transfer money.

Some AI-based tools harvest breached data sets, producing emails that seem to reflect personal knowledge about you—possibly referencing your address, job title, or other facts. Reports show that more than 42% of detected scams rely on AI in some capacity. Deepfake technology alone has risen by over 2,000% in just a few years.

Detection can be difficult since these messages appear genuine or reference correct personal information. That’s a prime reason experts advocate for protective steps, such as ID theft insurance. A thorough security approach can include monitoring, prompt alerts, and so removing private data from public sources, reducing avenues for criminals to exploit.

Why criminals target identities

Simply put, identity theft is profitable. Wrongdoers use stolen information in many ways:

• Loans: They open credit lines under your name, spend the money, and leave you facing the debts.
• Tax fraud: They file returns with your details, collect refunds, and vanish.
• Government benefits: They apply for assistance such as unemployment payouts, putting real applicants at a disadvantage.
• Medical scams: Some receive expensive treatments under someone else’s identity, causing confusion in health records.
• Jobs: Criminals can use your stolen personal details, like your Social Security number, to apply for jobs or pass background checks. They may try to hide their real identity or immigration status by using your information instead. This could cause you serious issues, including tax problems or incorrect employment records tied to your name. 

People often spend weeks or months trying to correct employment records, clearing up charges, and proving they never opened those accounts or collected the tax refunds. That’s time away from work and added stress. Insurance tied to identity theft may foot part of the bill for attorneys, mailing costs, and other incidentals as you restore your good name.

What is identity theft insurance?

Identity theft insurance helps cover the costs of restoring your identity after it’s been stolen. Typical coverage includes legal fees, shipping documents, and wages you lose if you miss work to deal with fraud. Certain plans also offer credit alerts and guidance from experts.

Identity theft insurance helps cover the costs of recovering your identity if someone fraudulently uses your personal information. Typical coverage includes legal fees, document shipping, lost wages, and other eligible expenses. For example, ExpressVPN’s Identity Defender offers ID theft insurance provided by American Bankers Insurance Company of Florida (an Assurant company) via a policy issued to Array US Inc., with coverage up to 1 million USD for eligible losses.

What does identity theft insurance cover (and not cover)?

When identity theft strikes, the costs can pile up quickly—not just financially but in time and effort. Identity theft insurance helps offset some of these burdens. Here’s what most policies typically cover:

• Reimbursement for eligible losses: Covers stolen money or other eligible expenses, helping you recover without bearing the financial burden alone.
• Attorney fees: Funds to hire legal counsel and dispute fraudulent charges.
• Document shipping and notarization: Help with official forms, letters, and affidavits used in recovery.
• Lost wages: Payment if you have to miss work while resolving identity theft problems.
• Dependent care: Assistance if you need help watching children or relatives while you handle the fallout.

These features can make the recovery process less financially draining. However, it’s equally important to understand what most policies don’t cover:

• Out-of-pocket expenses: Costs like travel, temporary accommodations, or additional living expenses are excluded.
• Prevention: Insurance focuses on recovery and doesn’t stop identity theft from happening in the first place.

Should you buy identity theft insurance?

Recovering from identity theft is rarely straightforward. You might face unexpected legal fees, have to take time off work to dispute fraudulent accounts, or even struggle to manage childcare during the process. This is where identity theft insurance steps in—providing financial support for eligible expenses and reducing the stress of reclaiming your identity.

But insurance alone isn’t always enough. While it reimburses recovery costs, it doesn’t prevent identity theft from happening in the first place. That’s why combining insurance with proactive tools, like those offered by ExpressVPN’s Identity Defender, can make all the difference.

With Identity Defender, you get more than just insurance:

• ID Alerts notify you of suspicious activity, such as your Social Security number being used for loans or employment.
• Data Removal reduces your digital footprint by scanning people-search sites and submitting removal requests, limiting the information scammers can exploit.
• Credit Monitoring helps you catch signs of fraud early by alerting you to changes in your credit score or unauthorized inquiries.

This comprehensive approach not only prepares you for the unexpected but also actively works to protect your identity before problems arise.

If you’ve ever wondered whether identity theft insurance is worth it, consider the peace of mind that comes with knowing you’re covered—from both a preventative and recovery perspective.

Practical tips to avoid identity theft

Prevention is just as important as recovery. While identity theft insurance provides financial security, adopting these practices can reduce the risk of ever needing it:

1. Use unique passwords and a manager tool: Short or reused passwords make you more vulnerable. A manager creates and remembers strong phrases for each account.
2. Enable two-factor authentication: A second verification step – often a text code, app prompt, or fingerprint – blocks thieves who only have your password.
3. Watch financial statements: Look at bank and credit card transactions often. Flag anything that looks suspicious. Reach out to the issuer right away if you see charges you never made.
4. Freeze credit reports: If you suspect data exposure, contact the major credit bureaus and request a freeze. That makes it far harder for anyone to open a loan or credit account in your name.
5. Secure personal documents: Store birth certificates, passports, and Social Security cards in a locked safe. Don’t carry your Social Security card with you. Shred papers containing personal info before discarding them.
6. Be cautious with calls and emails: Many criminals trick people by pretending to be a bank or government agency. Never share personal details unless you initiated the call and know the representative’s credentials.
7. Use a VPN: A VPN can prevent criminals from intercepting your data, especially on public Wi-Fi. ExpressVPN encrypts your connection, reducing the chance of snoopers collecting sensitive info.

While no solution is foolproof, taking these preventative steps alongside identity theft insurance can help you feel more secure—and better prepared to handle potential challenges if they arise.