When your identity has been used fraudulently, it can take a lot of time and trouble for you to prove that you are not personally responsible for any loans, debts, large financial transactions or serious crimes carried out by someone else using your identity. While the fraud is being investigated, you will experience difficulties in obtaining a loan, getting a new credit card, or applying for a mortgage, until it is resolved. There may be legal costs to be paid, or a loan may be necessary to cover your legal defense, and there will be additional expenses involved in replacing important documents. You may need to take unpaid leave from work during this process, resulting in further loss of earnings.

Having an identity theft endorsement on your homeowner policy ensures that you and your family will be covered up to the policy limit for expenses incurred as the direct result of identity fraud.

Most homeowners and renters policies provide coverage for theft of money or credit cards; however, the amount of coverage is limited (usually $200 in cash and $50 on credit cards). Once you have reported the loss or theft of your credit card to the issuing company, you are responsible for only $50 of unauthorized use.