TORONTO (CP) - Amid warnings about the risk of identity theft, Canadian insurance companies have begun offering policies that help defray the cost of setting things right, if you fall victim.
These policies, which have been coming on the market over the past couple of years, are usually sold as an add-on to house, apartment and condo insurance for roughly $30 to $40 a year - although at least one insurance provider plans to offer stand-alone identitytheft coverage starting in 2007.
Identity theft occurs when a crook uses another person's name and other personal information such as social insurance number, credit card number or bank account illegally to make purchases, borrow money or make other costly transactions without the victim's consent or even knowledge.
In essence, your stolen identity is used to commit fraud.
Identity theft itself is nothing new. However, in a world where more transactions are routinely conducted online or by phone - and where it's easier for sophisticated criminals to compile bits of personal information about you from multiple sources - there's an increased potential for trouble.
According to research by Phonebusters, a national anti-fraud organization run by the RCMP and Ontario Provincial Police, thousands of Canadians a year report cases of identitytheft - although the rate may be lower now than a few years ago.
In most cases, victims won't be liable for the money stolen in their name since the credit card company, bank or other financial institution usually covers that cost once it's established that a fraud has occurred.
However, it can be time-consuming and costly for innocent victims of identity theft to compile the information and get the legal advice required to verify they aren't at fault. It's those expenses - such as lost wages, lawyer and notary fees and courier charges - that are covered by identitytheft insurance.
"Those are where the real expenses come in. It's not the $5,000 or $10,000 loan. It's the expense of clearing everything up," says Bryan Seaton, spokesman for ING Canada, which recently began offering identitytheft protection across Canada.
ING's policy - which costs roughly $30 a year above the normal home insurance-pays for the time you take off work to a maximum of $500 per day, or up to $5,000 per year. It also pays for legal advice, notaries and couriers up to $25,000 a year per policy.
The British Columbia Automobile Association was one of the first organizations in Canada to offer identity theft insurance, starting in March 2005, as an optional add-on to home insurance offered to BCAA's 750,000 members.
"The intent was to provide some coverage above and beyond what the standard credit card agreement provides," says Brooke Hanson, BCAA's product manager for home insurance.
"We are launching in the spring a stand-alone product, but right now it's only as an add-on to home insurance."
As part of its coverage, the BCAA has partnered with a Vancouver law firm to provide a 24-7 phone assistance line to provide legal advice to people as they sort out the legal mess created by identitytheft.
"It's not been used all that much," Hanson admits. "I know that we've had a few claims but it's not been as rampant, I guess, as we might have thought at the beginning."
There are a couple of reasons for that, she suggests: people who take out identity theft insurance are probably as very vigilant and it's not always immediately apparent that identity theft has occurred.
Also, there has been increased public awareness of the measures - such as shredding documents with account numbers, proper storage of passwords and account numbers and software protections for your computer - that can be taken to prevent your personal information from getting into the wrong hands.
In addition, identity theft coverage is built into other policies such as title insurance, which is increasingly offered as part of a purchase of a house, condo or apartment.
"We have a duty to defend your title. So we do what we can to get it resolved. Or, in a worst-case scenario, we can pay out the money that you've lost as a result of this problem," says Kathleen Waters, vice-president of Title Plus, a service provided by Lawyers' Professional Indemnity Co.
"It could be that they've forged a deed to change the title into a new name. Or it could be that they've forged your name on a mortgage and put it on the title and got mortgage money from a lender."
And AIG United Guaranty is preparing to give through lenders the option of providing their customers with identity theft coverage.
"What we're doing is including it in our mortgage insurance, no cost to the consumer. Our lenders would provide an opt-in to provide this service to their borrowers, if they choose," says Brian Bell, vice-president of corporate development for AIG United Guaranty.
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