Insurance: Identity-theft coverage grows along with the crime

Policies should cover direct financial losses as well as cost of reclaiming identity and credit rating

By Bruce Constantineau, Vancouver Sun
Thursday, November 21, 2012

VANCOUVER — Robbie Dickson thought he’d done all the right things after his wallet was stolen a year ago.

He immediately cancelled his credit cards to prevent anyone from racking up fraudulent purchases and his life seemed none the worse for wear.

But six months later, items he never purchased started arriving at his Surrey business office as scammers had used his personal information to open new credit cards.

“They ordered small stuff to be shipped here and then, after establishing some credibility with the merchant, they ordered a couple of thousand dollars’ worth of stuff to be shipped to a different address,” Dickson said.

Fortunately, he didn’t have to pay for the clothing and electronics merchandise that was shipped elsewhere because the credit card companies accepted it was fraudulent activity done without his knowledge.

But the inconvenience didn’t end there for the owner of Firgelli Automations, as his reputation took a beating when someone armed with his ID began to impersonate him.

“I have some reputation in the automotive world and some guy pretending to be me was going to high-end dealerships and trying to borrow a Ferrari for the day and things like that,” Dickson said.

The poser apparently upset a lot of people because Dickson is suing a website for defamation over anonymous posts about him, which he claims spread false stories that left him open to ridicule. He suspects the posts were really aimed at the impostor.

Dickson has since closed his Facebook account to limit the amount of personal information available to would-be fraudsters but insists he can’t totally divorce himself from the online world.

“I still have my own personal website out there, which I use for business, so it’s a double-edged sword isn’t it,” he said.

Identity theft is a growth industry — creating an estimated $10 billion to $30 billion worth of fraud in Canada annually — and insurance products that offer some protection against the crime have become increasingly popular with consumers.

Identity theft insurance is most commonly offered as an add-on to home insurance policies and Vancouver insurance executive Daniel Mirkovic said it has become the third most popular add-on among his company’s clients.

“A lot of customers may not have personally experienced identity theft but they know someone who has and recall all the challenges it presented, so they choose to buy it,” he said.

Mirkovic, president of Square One Insurance Services, said 22 per cent of Square One customers add identity theft coverage to their home insurance policies — below only jewelry (37 per cent) and sporting equipment (27 per cent).

Annual premiums range from $20 to $100 for $10,000 to $50,000 worth of coverage, with most clients choosing the $20 premium that provides up to $10,000 of insurance. The home insurance policy’s deductibility amount — usually around $500 — applies to the identity theft coverage.

The insurance protects against losses suffered from:

  • Theft of your identity or credit;
  • Theft of credit, debit or automated teller cards;
  • Fraudulent removal of funds from bank accounts;
  • Forgery of cheques;
  • Acceptance of counterfeit Canadian paper currency;
  • Legal costs to clear your name; and,
  • Lost wages due to time away from work to deal with identity-theft matters.

Mirkovic said it’s important to look for two key ingredients when shopping for identity theft insurance — policies that cover direct financial losses and also cover any “reasonable expenses” that might arise to reclaim your identity and get your credit rating in order.

“You might need to hire a lawyer to help you get your identity back,” he said. “If the policy doesn’t cover reasonable expenses, shop around because there are lots of home insurance providers and they all offer different things.

It’s all about reading the fine print, as some home insurance companies automatically charge clients for identity-theft protection while others offer it as an option.

Mirkovic said consumers seem most concerned about credit card fraud, which is on the rise, while incidents of fraudulent cheques being issued against an account appear to be declining.

Credit card companies often cover losses related to credit card fraud as long as any theft or suspected irregularities are reported quickly.

“But you’re on your own for other expenses if you’re not insured,” Mirkovic said.

He said most clients choose the $10,000-a-year coverage because that’s usually enough, unless someone steals your identity and uses it for a long time before being discovered.

“It also depends on your income,” Mirkovic said. “The more income you have, the more coverage you should buy.”

He knows of one case in Ontario where a person’s identity was stolen and used to buy a $60,000 car while the victim, a high-income individual, was out of town.

“The challenge he had was that it would not be an unusual purchase for him, considering his income and purchasing history,” Mirkovic said.

While identity theft insurance can provide a measure of comfort for wary consumers, prevention is always the best option and authorities offer the following tips to minimize your risk:

  • Don’t carry every piece of ID you own in your wallet or purse;
  • Shred documents with personal financial information before disposing of them;
  • Contact creditors if your bills don’t arrive on time;
  • Choose complex passwords;
  • Don’t carry your social insurance number (SIN) card and only give your SIN when absolutely necessary; and,
  • Don’t put your credit card number in an email.

Identify theft

Consumer’s guide to insurance

Insurance is an essential component to consumers’ financial security, so The Vancouver Sun is publishing a six-day guide to what types of insurance are available and what coverage people might need.

Saturday: Life insurance
Monday: Home and property insurance
Tuesday: Pet insurance
Wednesday: Travel insurance
TODAY: Identity theft
Friday: Disability and caregiver insurance

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