"Insurance" in the case of Identity Theft is a bit of a misnomer, and many policies are marketed in a manner that may provide a false sense of security.

Though such a policy may offer reimbursement of certain miscellaneous expenses, Identity Theft insurance cannot and does not protect you from falling victim to the crime, and the policy's fine print typically imposes significant restrictions on what expenses may be eligible for reimbursement. Your ability to be reimbursed for expenses will also be subject to underwriting / insurance company approval.

Some important considerations if you are considering an Identity Theft insurance or reimbursement policy include:

Identity Theft insurance may reimburse or offset some of the costs of resolving the incident, but they do not reduce the time and hassle of the work required to resolve the incident.
 

• Most policies do not replace any missing funds that were actually stolen from you, such as from your checking or savings account, and also place a cap on the amount of reimbursement available to you, if any,  for lost work as a result of the incident.

  Example:  You pay for an Identity Theft "insurance" policy that costs you $10 per month, or $120.00 per year. A thief gains access to your checking account and steals $500.00. The policy is not going to replace the $500.00, it is merely going to cover the small miscellaneous costs of photocopies and postage for mailing the necessary letters.

  
   
• Many policies have a significant deductible, such as $500 or more.  This means that in many typical Identity Theft cases, the policyholder bears all of the expense despite having paid the premiums for "insurance".
   
  Significant expenses, such as legal fees or time lost from work, usually require pre-approval, if they are covered at all.
  
  Lost time from work can quickly add up to a significant amount and create a financial hardship, and the severity of each individual case will determine whether or not the services of a qualified attorney are required. (If the policy specifically provides for assistance with legal costs, this may be an important benefit to you, depending upon the terms, conditions, and restrictions that are imposed.)