Identity theft insurance guide

Identity theft is a growing phenomenon. This guide will tell you how to protect your identity.

Use the links below to move to that section.

• What is identity theft?
• How does ID theft occur?
• How to avoid becoming a victim
• Do I need ID theft protection?
• How do policies work?

What is identity theft?

More than 100,000 people in the UK are affected by identity theft every year according to the Home Office. ID theft occurs when personal information is obtained by someone else without the owner's knowledge. It may support criminal activity including fraud, deception, or obtaining benefits and services in the victim's name.

The results can be devastating. Once thieves have your information, they can open new credit cards or bank accounts in your name and run up debts, take out loans or apply for a new passport or identity document, and use your identity as a cover for criminal activity. Fraudsters may also apply for social security benefits in your name or give your name to the police if they get arrested and if they are released on bail, any future arrest warrants will be in your name.

How will I know if my identity has been stolen?

Indicators that you might have had your identity stolen include losing, or having stolen, important documents such as your driving licence or passport, not receiving letters you are expecting from your bank, applying for a state benefit and being told that you are already claiming, or being refused a loan or credit card despite having a good credit history. But by the time you discover you have become a victim, your identity might have been used by someone else for some time and the situation could be much worse than it first seemed.

How does ID theft occur?

Intercepted Mail

Some identities are stolen by intercepting a person’s mail. You should be extra careful if you live in a property where other people may have access to your post, such as a block of flats. If you’re concerned, make arrangements with your bank for you to collect new cards or cheque books from a branch. If you move house make sure you tell everyone you have credit agreements or accounts with of your new address, and contact the Royal Mail to redirect your post.

When you receive your bank statements, check them carefully for any transactions you don’t recognise. If you’re suspicious about anything, contact your bank or credit card company. Make sure you shred receipts, statements, bills and official forms before you throw them away as some fraudsters steal your identity by retrieving bank statements and bills from your bins.

Handbags

Your identity might also be stolen if you lose your handbag containing personal details, or have it stolen. If this happens, it is vital to inform the institutions concerned straight away – for example, if you bag contained your bank cards and driving licence, inform your bank and the DVLA.

Online

Other attempts at identity theft take place online. If you have an e-mail account, the chances are you have received many e-mails claiming to come from your bank and asking you to confirm your account details or online banking passwords. Banks never send emails asking for this information so, chances are, the emails are from fraudsters. This criminal practice, known as "phishing," is growing fast.

Other online criminals send professional looking emails purporting to be from lotteries or other competitions. They tell you that to claim your prize you need to send them a copy of your passport or other ID. Never do this.

How to avoid becoming a victim

• Invest in a shredder to destroy any receipts, bills, bank statements and even junk mail that you wouldn’t want other people getting their hands on.
• Be careful when you log in to online accounts. Be aware of others close by who may try to take note of your account information. Don’t choose or change your security details in a public place.
• Always keep your bank cards in your possession and never let them out of your sight. Never let anyone know your Personal Identification Number (PIN). When using a cash machine or using your card in a shop, beware of anyone trying to watch you enter your PIN. This is known as ‘shoulder surfing.’
• Check your credit file for accuracy. Look for unauthorised activity, such as accounts which aren’t yours, credit searches by companies you haven't dealt with or address links to addresses you don't recognise. You can arrange to receive your credit file regularly to monitor credit applications made in your name.
• If you move home, inform all the relevant organisations of your change in address. Consider using a Royal Mail Re-direct for at least a year to make sure all post is forwarded to your new address.

Do I need ID theft protection?

In response to the rise of identity theft, banks, insurers and other institutions have started to offer ID theft insurance. If you take out this cover and your identity is stolen, the insurer will help you deal with problems that arise and get your life back on track.

If you think you would struggle to cope without access to your money if you were to lose your credit or debit cards or wouldn’t know what to do if your identity was stolen, identity theft insurance could be well worth having.

Policies generally cover you for the expenses you might incur if your identity is stolen. These might include anything from legal fees for defending criminal charges associated with identity theft; telephone calls; postage; or rejected loan application fees and lost wages if you have to take time off work to reclaim your identity. So think about whether you could afford to pay these expenses if you did not have insurance.

How do policies work?

You will pay a monthly or annual fee for your identity theft protection policy, normally by direct debit. Most policies include access to your credit report and will notify you if any changes are made to your report – such as a loan being taken out in your name. If you start becoming concerned that you are a victim of identity theft – or have evidence that you are - your insurer will allocate you an identity theft expert to help you with your case. They will be able to answer any questions you have and help solve issues arising due to your stolen identity.

Who offers identity theft protection?

Identity theft insurance or protection is offered by a number of financial institutions. The most popular policies are offered by the HBOS group, Sainsburys Bank, CPP and BT.

What does identity theft protection cost?

Identity theft protection generally costs between £3.75 and £6.99 a month or between £45 and £84 a year.

Back to Top