Identity theft insurance in Texas — what it covers, and is it worth it?

This guide explains what identity theft insurance pays for, what the Texas Department of Insurance (TDI) says about whether it is worth buying, and how to find out whether you already have it.

The short version. Identity theft insurance in Texas pays you back for what you spend to restore your identity and repair your credit, according to TDI's What to know about identity theft insurance, and what a policy pays depends on its terms, deductible and limit. The same page says banks and credit card companies cover most or all fraud losses, and that complex cases can mean attorney's fees and lost wages.

Here's what we'll cover: what the coverage pays for, TDI's answer on whether it is worth it, the ways to get it and the cost TDI gives, the questions TDI says to ask before buying, how TDI says identity theft is treated when an insurer looks at your credit, TDI's prevention tips, and how to check your own policy.

What it pays for

Identity theft insurance reimburses the costs of restoring your identity and repairing your credit, and what a given policy pays depends on its terms, deductible and limit. TDI's What to know about identity theft insurance defines it this way: "Identity theft insurance pays you back for what you spend to restore your identity and repair your credit."

The same page then lists the costs: "These costs can include fees, phone bills, lost wages, notary and certified mailing costs, and sometimes attorney fees."

Read as a group, the items on TDI's list are the expenses of sorting out the problem, such as mailing, notary and phone costs and time away from work. Money taken by a thief is not an item on that list. If you are weighing a policy, the question to put to the company is which of these costs its policy reimburses.

TDI's page adds that some policies include credit monitoring and alerts and help you start the process to restore your identity. That is a feature of some policies, so ask whether a given policy has it.

TDI also describes the harm the product relates to. Its page says victims of identity theft can be left with a bad credit record that can take months to correct.

TDI's own answer on whether it's worth it

TDI answers the question of whether identity theft insurance is worth it with a trade-off, and it does not recommend for or against buying. In the "Is it worth it?" part of What to know about identity theft insurance, TDI says: "Banks and credit card companies cover most or all losses due to fraud so most victims' spend more time than money restoring their identity."

TDI's next sentence gives the other side. It says complex cases can mean attorney's fees and lost wages if you need to take off work, which could be covered by an identity theft policy.

So TDI's page points to two things to weigh. One is that, in TDI's words, fraud losses are mostly or wholly covered by banks and credit card companies. The other is the cost of a complex case, which on TDI's description is legal fees and time off work.

How those two weigh up depends on your own circumstances. A useful question to ask yourself is what time away from work would cost you if you had to take it.

Three ways to get it — and you may already have it

TDI describes three ways identity theft coverage can reach you: inside a homeowners policy, added to a homeowners or renter's policy, or as a stand-alone policy. All three are set out in TDI's What to know about identity theft insurance.

Inside a homeowners policy. TDI's page says: "Some homeowners policies include coverage for identity theft." It follows that with the advice to check your policy or ask your agent to see if yours does. TDI's How to protect yourself from social media identity theft says the coverage might be included in your homeowners or renters policy.
Added to a policy. The identity theft insurance page says other companies can add it to your homeowners or renter's policy.
Bought on its own. The same sentence on that page says those companies can also sell you a stand-alone policy.

Because TDI says only that some homeowners policies include this coverage, the place to start is your own policy. Our guide on renters insurance in Texas covers renters policies more generally.

On price, TDI's identity theft insurance page gives a range straight after describing the add-on and stand-alone options: "These typically cost $25-$50 a year." The page shows a last-updated date of 1/27/2023, so treat the range as TDI's figure as of that date. It is TDI's description of what these typically cost, and the page does not give a price for any particular policy.

The same TDI page also says some credit monitoring services provide identity theft protection or help with recovery. If you already pay for a service like that, check what it includes before you add insurance.

The questions TDI says to ask first

TDI says to ask about deductibles and policy limits before buying identity theft insurance. Its What to know about identity theft insurance page says that, as with any insurance policy, you should make sure you know exactly what you are purchasing and be sure to ask about deductibles and policy limits.

Deductibles. TDI's Home insurance guide, which is about home insurance in general and not about identity theft coverage, defines the term: "A deductible is the amount of a claim that you must pay yourself." The costs on TDI's identity theft list include items such as notary and mailing costs, so it helps to compare a policy's deductible with costs like these.
Limits. A limit is the other number TDI says to ask about. TDI's page names attorney's fees and lost wages as the costs of complex cases, so it is worth asking how a policy's limit applies to those.

A third question follows from TDI's description of the product. TDI says some policies help you start the process to restore your identity, so you can ask whether a policy includes that help or only reimburses costs.

The Texas angle that has nothing to do with this policy

Identity theft also appears in TDI's guidance on how insurers use credit, which is separate from identity theft insurance. TDI's How your credit score can affect your insurance rates is a general page about credit and insurance, and it says most insurance companies use your credit history to help them decide whether to sell you insurance and how much it will cost.

That page then says: "Insurance companies can't charge you more or not insure you if your credit score was hurt by these events" and lists five events. They are a major illness or injury, the death of a spouse, child, or parent, temporary job loss, a recent divorce, and identity theft.

The same TDI page says you can ask the company to make an exception if your credit was affected by any of the protected events. It also gives a notice timeline, as of the page's 10/14/2024 update: "The insurance company has to tell you within 30 days if it's denying you coverage or charging more because of your credit report."

TDI's page is about credit and insurance in general and does not mention identity theft insurance. If identity theft affected your credit, it is the page to read before you speak to a company or agent. Our guide on whether home insurance quotes affect your credit score covers credit and home insurance quotes.

What TDI says about protecting yourself

TDI's identity theft pages give prevention tips alongside the information about insurance. Its How to protect yourself from social media identity theft says taking simple steps to protect your social media accounts can help you avoid most scams.

TDI's What to know about identity theft insurance lists three steps, paraphrased here:

Watch your surroundings. Be aware of your setting when entering a credit card number or giving one over the phone, and make sure strangers can't see or hear you.
Tear up pre-approved card applications. Criminals may use them and try to activate the cards.
Ignore unsolicited requests. Never respond to unsolicited email that requests identifying data.

TDI's social media page has six tips. Four that deal with what you post and which accounts you keep are paraphrased here:

Don't post ID cards. A photo of a new license or ID card may include your birthday and other identifying data.
Question quizzes and surveys. Scammers ask questions with answers you might use for security login questions, such as your first pet's name or your hometown.
Close old accounts. Scammers look for old, unused accounts with outdated passwords that are easy to hack.
Protect family members. On TDI's account, teens are the most likely to overshare and usually have clean credit histories, which makes their identities valuable, and it is a good idea to check the accounts of family members in that group.

TDI's tips do not mention a policy. For recovery, TDI's identity theft insurance page directs readers to the FTC website for more tips and recovery resources.

How to check your own coverage

Checking whether you already have identity theft coverage starts with your home or renters policy. These are steps you can take, with TDI cited only for the facts inside them.

Find your declarations page. TDI's Home insurance guide, which describes home policies, says the first page of your policy is the declarations page, with a summary of your coverages, dollar limits, and deductibles.
Look for an identity theft line. It may be listed as an add-on. The same guide, again describing home policies, says most companies offer endorsements, or policy add-ons, that let you increase or add coverage. Its list of common endorsements does not name identity theft, so ask if you are unsure.
If you find it, note the limit and the deductible. These are the two things TDI's identity theft insurance page says to ask about.
Ask whether the policy helps you start the process to restore your identity. Some policies do, according to TDI's identity theft insurance page.
If you don't find it, ask your agent. TDI's identity theft insurance page says to check your policy or ask your agent.
Check what you already pay for. Per the same page, some credit monitoring services also provide identity theft protection or help with recovery.
Work through TDI's prevention tips. They apply with or without a policy.

Key facts

TDI's What to know about identity theft insurance says identity theft insurance pays you back for what you spend to restore your identity and repair your credit, and that these costs can include fees, phone bills, lost wages, notary and certified mailing costs, and sometimes attorney fees. The same page says to make sure you know exactly what you are purchasing and to ask about deductibles and policy limits.
The same TDI page says banks and credit card companies cover most or all losses due to fraud, and that complex cases can mean attorney's fees and lost wages, which could be covered by an identity theft policy.
Coverage for identity theft is included in some homeowners policies, according to TDI's identity theft insurance page, which adds that other companies can add it to a homeowners or renter's policy or sell a stand-alone policy.
On cost, TDI's identity theft insurance page, last updated 1/27/2023, says of these options: "These typically cost $25-$50 a year."
TDI's How your credit score can affect your insurance rates lists identity theft among the events for which it says insurance companies can't charge you more or not insure you if your credit score was hurt, and says you can ask the company to make an exception if your credit was affected by any of the protected events.
As of its 10/14/2024 update, the same TDI credit page says the insurance company has to tell you within 30 days if it is denying you coverage or charging more because of your credit report.
TDI's How to protect yourself from social media identity theft says taking simple steps to protect your social media accounts can help you avoid most scams.

Sources: Texas Department of Insurance, What to know about identity theft insurance, How to protect yourself from social media identity theft, How your credit score can affect your insurance rates and Home insurance guide. This page is general information, not legal advice.

Take the next step

Before you buy identity theft insurance, check whether your home or renters policy already includes it, and if it does, note the limit and the deductible. If this turns into a broader look at your policy, what home insurance does not cover in Texas and how to choose home insurance in Texas are the companion guides.

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