Some identity theft protection programs say that they will reimburse you for your losses. That sounds well and good, and it definitely puts your mind at ease, but it could easily turn into a land mine if you don't know specifically what they mean when they say the word "losses".
Insurance can be a tricky business if you are paying attention to what is, and more importantly what isn't, being said. If you lose money in an identity theft, this would be called "actual losses" in the insurance world. Any agent that is selling you an identity theft reimbursement program, which is usually nothing more than a rider on your homeowner's policy, should make this very clear to you. If they do not, they are uninformed at the very least. Although your Guide has reviewed every identity theft protection program, that he is coming contact with, no program yet has covered actual losses. If you lose money from your bank account, you will want to know about the Electronic Funds Transfer Act (EFTA). This will outline the process you will need to go through to try and recover your actual losses.
Identity theft reimbursement programs do give you money back that you have to spend to fix your identity. That would cover things like certified mail, or telephone calls, retaining the services of a notary public to certify documents, things like that. Generally speaking, these costs are very low and when not pose any kind of hardship. The program may cover the cost of getting photo copies of official documents such as your police report, and the inevitable exchange of harshly worded letters to companies that have given somebody credit in your name, but don't know that they are required by law to turn over all documentation to the victim of identity theft (or somebody who is authorized by the victim to investigate the identity theft.)
This last part will only apply to anyone who is pursuing the matter on their own. Many identity theft victims decide that they are not going to press charges against the person who stole their identity, when they learn that it is a close friend, church member, or even somebody in their family. This is not always the case, of course, but that is a consideration in how you handle the recovery process.
And it will be you that is handling the recovery process. Identity theft reimbursement programs have this in common with identity theft credit monitoring programs, they don't actually do anything to help you out. They only reimburse you after the fact, you will still have to do all of the work on your own. A lot of this work must be done during normal business hours, because this is when you can actually walk in and talked to a banker or business owner that has gotten tangled up in your identity theft problem. This is the only time you'll be able to get in touch with somebody in the records department of a hospital or healthcare provider, if you have a medical identity theft. But business hours are the only time you're going to get anything done with the Internal Revenue Service, or the Department of Social Security.
All this means that you should expect to take time off work. Unless you have complete control of your schedule, you may have to take vacation days. If you don't have vacation days, you will just have to take time off work and not get paid for it. Happily, many identity theft reimbursement programs will also reimburse you for the time you take off work. However if it does, keep in mind that you will receive a 1099 from the insurance company when tax time rolls around. Since they are reimbursing your income it is only natural that you're expected to pay taxes on it.
And while we're talking about bankers who are not following the law about giving you documentation on your identity theft that they have in their records, be sure to look at the identity theft reimbursement program covers the cost of an attorney. Some do, some don't, and some put certain requirements on what they will and will reimburse from a legal standpoint, if they reimburse anything at all.
Identity theft reimbursement programs are a good safety net to help in the road to recovery, but you will have to make a determination about whether the cost of the program offsets the risk. Since these are usually attached to your homeowner's policy at a low cost, or even no cost to you, they are worth it in your guides opinion but capitalize guide, especially if the cost is rolled into your insurance premium.