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With the serious nature of identity theft, many people are turning to identity theft insurance as a method of protecting themselves from the ramifications resulting from this crime. But what exactly is identity theft insurance? Do I really need it and how much will it cost me?

Identity theft insurance coverage varies in coverage, deductible and costs, just like many other forms of insurance. In most cases identity theft insurance will cover lost wages due to time taken off work to correct or repair damages due to identity theft. However, this coverage often carries a limit, in the approximate amount of $2,000.00. The Privacy Rights Clearinghouse estimates that victims spend on the average the equivalent of 22 work days trying to correct the damage from identity theft.

Identity theft insurance usually also provided benefits coverage for: attorney fees (which may or may not be necessary); notarization of documents, mailing, postage, supplies, copy costs, and phone bill charges which you may incur in an effort to correct the damage done to your credit and financial reputation.

Critics of identity theft insurance claim that it is 'not worth the money,' (Consumer Reports magazine, as reported on MSNBC.com) or that it does not provide enough benefits. The concerns include: identity theft insurance does not provide reimbursement for money that is stolen or for identity theft expenses that occurred because of who the 'thief' was. Most commonly a family member is the culprit in the case of identity theft and in that instance most insurance does not pay benefits. A word of caution by The National Association of Insurance Commissioners is that insurance 'cannot protect you from becoming a victim of identity theft and does not cover direct monetary losses incurred as a result of identity theft.' Although, an unfair criticism, some conclude that the purchase of identity theft insurance may create a false sense of security, thus consumers may not be as careful with their credit and financial information.

The cost of identity theft insurance cost varies on both the coverage and how you obtain your insurance. Identity theft insurance can range from free to approximately $200.00 a year depending on how you have purchased it. There are three main ways to obtain identity theft insurance:

- As a provision in your homeowners or rental property insurance
- As a service of your credit card company, bank or lender
- By purchasing it as an individual''stand alone' policy

The first step in obtaining identity theft insurance is to contact your banks, credit cards, lenders and insurance providers. Determine what coverage you have, how much it will costs to add additional coverage or to add identity theft to an existing policy and get details of the existing provision if it exist. You may need to purchase it as a 'rider' or extra to your existing policy much like purchasing flood or earthquake insurance ' but not as expensive.

In some cases credit lender; such as the credit card company, mortgage or other loan provider, provide identity theft insurance. This coverage may be free or it may require a yearly service fee through the lender. For example, American Express provides some form of identity theft insurance to its card holders free of charge; MasterCard offers it through the specific banking partners and VISA may do a combination of both options. One word of caution, make sure that the identity theft insurance covers all your existing credit, not just the one card associated with the coverage. If it only covers one card, that what happens to the remainder of your credit?

One other option is to purchase your own 'stand alone' policy through most of the major insurance providers such as Nationwide, State Farm, and/or Farmers Group. If you are not using a 'major' player in the insurance field be sure that the company you are purchasing from is reputable. Sometimes these are the most dangers purchases of all as they may be an effort to gain your credit information for the sole purpose of identity theft. If your insurance provider bills this coverage monthly, be sure to multiply the monthly cost by 12 to determine the yearly costs. Most importantly make sure to keep your coverage current.

Another consideration when utilizing identity theft insurance is the level of deductible. Generally the range from $100 to $250, but some may be as high as $1,000. The Federal Trade Commission estimates that the average victim spends less than $1,500 to recover from identity theft so it important to do the math and determine if your insurance premium plus deductible is a good value as well as provides the right level of protection for you and your family.

Nothing can protect you completely. It is important to follow all the basic rules for protecting your credit, identity, and financial information like: keeping your personal and credit information in a safe place, not releasing the information to others and shredding all documents. But it is also good to know that you can also have for free or purchase additional assistance in the form of coverage and monetary support during one of the most difficult financial times in your life.

Finding out about damages to your identity and credit is just the beginning. After that begins the time consuming and often frustrating process of repairing the damage and correcting the mistakes. Identity theft insurance may be your choice to help you through this expensive and frustrating task. Make sure you know what options and coverage are available to you.