identity theft, insuranceDealing with identity theft can be incredibly overwhelming, especially if you don’t know where to turn to resolve credit issues, restore your identity, or recoup your costs. It may take months or even years for you to recover and get your credit records corrected.

Identity theft insurance can help with some of those tasks. In the past few years, more insurance companies have been offering identity theft insurance as a specialized niche product, says Jeanne Salvatore, senior vice president of public affairs and consumer spokesperson for the Insurance Information Institute.

“We’re living in a time where everything is electronic. Unfortunately, there’s a greater risk that your identity can get stolen. If your identity is stolen, it can be extremely time-consuming and complicated to restore, ” Salvatore says. “These types of products are very useful because they help you with additional costs you might incur to restore your identity.”

Identity theft insurance reimburses victims for the cost of restoring their identities and repairing their credit reports. Often, the insurance provides access to services that may help victims of identity theft recover their identities.

The insurance also covers expenses such as phone bills, lost wages, cost for notarizing fraud affidavits or other documents, and certified mail costs, and it also may occasionally cover pre-approved attorney fees.

“Buying this does not prevent a disaster from happening,” Salvatore notes, “But with most products you are going to get assistance, and also reimbursement, for some of the various expenses you might incur because you lost your identity.”

Federal law sets a $50 liability limit for the fraudulent use of credit cards, so the losses you may incur are limited. But restoring credit is a slow and time-consuming process, and identity theft insurance is one way to help consumers cope, according to the National Association of Insurance Commissioners (NAIC).

Check to see if your current homeowners or renters insurance includes identity theft insurance as part of your policy. If not, you may be able to add it as an endorsement for a small fee. You also may be able to purchase a stand-alone policy from another insurer, bank, or credit card company without having another policy with that company. Identity theft insurance generally costs between $25 and $65 per year.

“We’ve seen a trend toward more and more of these types of niche insurance products over the last couple of years,” Salvatore says. “It’s a very narrow, very specific product for people who are concerned that they could be at risk of losing their identity.”

Before you buy, NAIC recommends the following:

  • Make sure you understand what you are purchasing, and compare the product’s price, coverage, and deductibles among multiple insurers.
  • Find out what the policy limits are. Most identity theft insurance policies have policy limits of $10,000 to $15,000.
  • Find out if there is a deductible. Some policies require you to pay the first $100 to $500 of costs incurred for reclaiming your financial identity.
  • If the policy covers lost wages—taking time off from work without pay to deal with reclaiming your financial identity—verify what limits apply. If you are a salaried employee, you may not have lost wages coverage.
  • If the policy covers attorney’s fees, verify what limits apply, and find out if legal work needs to be pre-approved by the insurer.

If you suspect you’re a victim of identity theft, the Federal Trade Commission advises that you call one of the three nationwide credit report agencies to request a fraud alert (the agency to which you submit your request will alert the other two), order your credit reports (you are entitled to one free credit report each year from each of the three agencies through annualcreditreport.com), and create an identity theft report.

A Chicago-based writer and editor, Eve Becker writes about personal finance, health and other topics. She is a former managing editor of Tribune Media Services.