Recently, I learned that Credit Sesame offers identity theft protection to their users. In addition to their free credit score and monitoring service, each user will receive a $50,000 identity theft insurance policy for free.
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What's the difference between identity theft protection and identity theft insurance?
Identity theft protection is a service that monitors your credit for potential signs of fraud. No one can protect you completely from fraudsters, but you can get alerted quickly if it were to happen.
Identity theft protection services are really monitoring services. For example, the monitoring service offered by Credit Sesame alerts you when a change is found on your credit reports such as a new credit inquiry or new account. If you haven't applied for credit recently, then these changes can mean a potentially fraudulent activity.
With identity theft insurance, it's an insurance policy designed to help victims of fraud get back the money they spent resolving identity theft issues. For example, some identity theft victims may need the help of a lawyer or pay for credit freezes, in which case the insurance will reimburse you for those expenses.
Is Credit Sesame's Identity Theft Insurance free?
Yes, it's absolutely free with transparency and no hidden terms. It is an insurance policy–not just a prevention feature–that does not cost you a penny. Even though this is a free policy, Credit Sesame's offering is a pretty good added bonus.
With any identity theft protection service, the feature they sell is peace of mind. Credit Sesame is giving you some peace of mind by offering you protection and insurance. Yup, absolutely free.
But, is there a catch? Companies certainly can't give everything for free and continue operating. So what is it? Well, think of this as a marketing expense and a differentiation strategy to get your business and keep it.
In my Credit Sesame review, I mentioned how they earn money recommending products and services from their affiliates partners to you. They also earn income from paid premium services such as a $1 million ID theft insurance policy. If they can lure you to use their free app, then they have an opportunity to offer you alternative financial options based on your credit. It's a win for them and a win for you.
What does the Credit Sesame Free Identity Theft Insurance Policy cover?
The policy covers many things such as court costs, legal representation, notary service, postage and more that are only related to resolving your identity theft issue. Credit Sesame's insurance policy does not cover the money stolen from your accounts or pay off credit used by a fraudster. You want to check with your lender or creditor regarding the protections you have about credit used by an identity thief.
Also, the policy will not reimburse you if your negligence caused the identity theft to happen. For example, giving your credit card number to a friend and they charge up your credit. It only covers stolen information and errors that were outside of your control.
Is $50,000 enough to cover your expenses?
The expenses you incur because of identity theft may never reach past a few hundred dollars. And since the policy only reimburses you for the cost associated with regaining your identity you may never need more than $50,000. Of course, paying for their $1 million policy may seem unnecessary, but if it gives you peace of mind, then it may be the right upgraded product for you.
You do have other protections that come from the Fair Credit Billing Act and the Electronic Fund Transfer Act (EFTA). These Acts help consumers limit the cost of liability to $50 (some financial institutions will no impose a cost) for fraudulent activity.
For instance, your credit card was used and fraudulent charges of $3,000 were made. The Act limits your liability to $50 and the creditor would take the $2,950 loss. If the fraud involved your bank account, you must report the activity within 48 hours to limit your cost. Read more about the Electronic Funds Transfer Act consumer protections.
My Smile Summary: Is it worth signing up for Credit Sesame?
Credit Sesame is a free app and offers a really good credit monitoring service and a free credit score. The identity theft insurance is an added benefit that differentiates them with other free credit monitoring apps. So, it can certainly be worth signing up. If you want to learn more, you can read my entire Credit Sesame app review first.
As with Credit Sesame's free credit monitoring, their free $50,000 identity theft insurance has a competitive paid premium services offering too. It's up to you to upgrade or just stick with the free service.
To take advantage of this free identity theft insurance, sign up for Credit Sesame. Download the app, and get free credit monitoring, a free credit score, and the insurance policy. You must complete the profile which only takes a couple minutes. Just in case you're wondering, Credit Sesame uses the latest technology to protect and safeguard your personal information.