Does Home Insurance Protect You from Identity Theft?

By Lesley Green
A dad working at home with his young child in his arms.

Identity theft and identity fraud are on the rise, but what can you do about it?

  • Losses due to fraud have more than tripled in the first two months of 2021 compared to January and February 2020.
  • Insurance for identity theft and identity fraud is available from many home, tenant, or condo insurance providers.
  • The pandemic has highlighted the need for more cybercrime coverage, including protection from cyberattacks and ransomware.

The COVID-19 pandemic has brought out the best in people and the worst. On this latter point, cybercrime is thriving, and the proof is in the fraud numbers.

In January and February 2021, the Canadian Anti-Fraud Centre (CAFC) says there were a total of 11,266 reports of fraud and 7,646 victims of fraud with combined losses of $34.6 million.

Compare this to the same time last year: All three of these numbers are up considerably.

In January and February 2020 (pre-COVID), there were 7,804 reports of fraud and 4,119 victims of fraud with losses totalling $9.2 million.

The losses Canadians suffered due to fraud in the first two months of 2021 are more than triple the amount lost before the COVID-19 lockdown. What's more, CAFC estimates that only 5% of all frauds are reported to them. The numbers are bound to be significantly higher.

Certainly, some of these frauds were phone-based and others through the mail, but it’s safe to assume most are online trickery. With this thriving cybercrime presence and the reality it can happen to anyone, you may be looking for financial protection from losses through your home insurance, tenant insurance, or condominium coverage policy.

The good news is that coverage does exist and can be easily tacked on to your existing policy if it’s not already included. But is it enough?

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Identity theft and identity fraud insurance coverage

Home insurance coverage for identity theft and identity fraud has been around for a decade. It’s widely available from most, if not all, home insurers. If your policy doesn’t have it automatically included in your coverage (as some do), it is available as an optional add-on.

Coverage for identity theft and fraud will vary by policy but generally includes:

  • Expenses like professional fees charged by notaries and lawyers for paperwork you may need, legal fees if you need to go to court, as well as other expenses you may incur reclaiming your name (long-distance calls and registered mail costs).
  • Credit bureau monitoring and reports.
  • Legal assistance and counselling.
  • Earnings lost due to time away from work (some reports estimate that it takes a month to a year to clear everything up).

Beyond coverage for identity theft and identity fraud

Identity theft and fraud aren’t the only types of cybercrimes out there, but they are traditionally top of mind when it comes to an individual’s need for insurance protection.

That is, until COVID-19.

Now, attention is turning to a broader range of online threats that may not have anything to do with identity theft or identity fraud. There have been calls for improved cybercrime coverage for the everyday individual that includes protection from the costs resulting from “financial fraud and fund transfer fraud, online retail fraud, ransomware, system compromise, cyber extortion, cyberbullying, and online harassment remediation.”

It’s a long laundry list of risks, to be sure, but as more Canadians work from home more often, some home insurance policies may someday provide more cybercrime coverage than what’s currently available.

Tips to protect yourself from nefarious online tricksters

The Government of Canada’s Little Black Book of Scams features tips for Canadians on ways to stay safe online (it also comes in many different languages). The following are just a few of those tips:

  • Avoid public computers or Wi-Fi hotspots, such as in coffee shops, to access or provide personal information.
  • Create strong and unique passwords for each of your online accounts. Password-protect your devices and home Wi-Fi network.
  • Use a secure and reputable payment service when buying online. Look for a URL starting with "https" and a closed padlock symbol.
  • Keep in mind that reputable organizations will never ask for your personal or financial information through email or text.
  • Ignore communications from unknown contacts. Do not click on links, forward or reply to the email, or download attachments.
  • Ignore (and delete) emails about purchases you haven’t made, deliveries you’re not expecting, lotteries you haven’t entered, and prizes you have to pay to receive.
  • Don't reply to spam messages, even to unsubscribe, and don't open attachments or follow any links.
  • Update your antivirus software on all devices.