Covering against cost of ID theft

Published on Friday 25 January 2008 21:57

IDENTITY fraud has not been far from the headlines recently, following a catalogue of high-profile data losses.

It appeared to kick off on 23 November when Her Majesty's Revenue and Customs (HMRC) lost two CDs containing details of 25 million people. Since then there has been a stream of unfortunate, and potentially dangerous, incidents. One of the most recent saw a box of 200 files from Prudential, containing details of wealthy clients' investments, found scattered on a main road.

When it comes to fraud, banks and building societies are duty bound to refund the cash illegally taken from an account, but that's only the start of the battle. People then have to set up direct debits again, for example, and this can be time consuming.

That's why identity fraud insurance can be worth considering. An insurance policy – 4Sight from specialist broker Berkeley Alexander – has been launched to provide peace of mind. While the banks, under the banking code, cover the risk of someone obtaining this information to clear out an account, this is not the case when it comes to unscrupulous characters using the personal information to clone an identity and obtain credit. ID thieves may then run up bills, launder money, carry out benefit fraud and take out fraudulent loans.

This leads to a great deal of inconvenience, stress and expense as the victim struggles to overturn a poor credit rating.

4Sight will provide up to 25,000 to cover costs associated with identity theft. These include:

&#149 Costs incurred defending a claim by a financial institution

&#149 Costs associated with setting aside or cancelling wrongly entered civil judgments

&#149 Loss of earnings

&#149 Communication costs and costs associated with restoring the insured's credit rating following identity fraud.

Ted York, managing director of Berkeley Alexander, said: "

ID fraud is one of the UK's fastest-growing crimes, with criminals netting an estimated 1.3 billion last year. The process of clearing your name can be expensive and time consuming and incredibly stressful. That's why it is better to have the piece of mind of knowing that you have cover in place."