Insurance offered against identity theft is a waste of money and does not protect against any financial loss.
Lovemoney.com claimed that a typical ID theft insurance policy might include insurance which covers the cost of restoring your identity. This is generally £50,000 to £60,000 worth of cover that will pay for legal fees, lost salary and rejected loan application fees, while help from an identity theft 'expert' will provide guidance and support.
Baker commented: “Firstly, the cover might look cheap but for the amount of protection on offer, ID theft insurance is actually pretty expensive relative to some other types of insurance.
“Secondly - and I think most importantly - this insurance protect against any financial loss you might suffer as a result of ID theft. Surely, this is the biggest problem of all, so I fail to see the point of a policy, which doesn't cover it.
“Don't forget that money you lose as a result of fraudulent activity should be reimbursed by your bank or credit card provider in most cases anyway. Fraud is a crime, and as such fraud protection is high on the agenda of many financial services companies. As long as it cannot be proved that you acted negligently - such as keeping a record of your PIN with your credit card - you should be able to recover your losses from your bank or credit card provider.”