Honesty is the best policy, right? I've spent my life being honest, and do you know what is the most important lesson I've learned is? The truth hurts. And when you (meaning me too) says it like it is, someone somewhere isn't going to like it. So I'm being honest here: The identity theft protection services offering a $1 million identity theft insurance policy is baloney.
OK, I have no friends now...at least in those who provide identity theft insurance. I still like you, though.
Here's some perspective: I just looked at my automobile insurance policy. It provides $300,000 if I drive over someone, mangle the person and leave him or her a paraplegic. But identity theft insurance provides more than three times that? Why? Why would they offer $1 million in insurance? Seems out of whack.
When identity theft protection was born, the one company that was first to market offered the $1 million insurance guarantee as an incentive (think creative marketing) to buy its service. It worked--lots of people bought. Bravo! However, the way the company marketed the $1 million insurance guarantee made it sound like you'd actually get a million dollars if your identity got stolen. I think someone got in trouble for that, and I think the government told the company the language had to be toned down.
So from that point on, all the other new kids on the block had to offer the same million-dollar guarantee in order to keep up with the Joneses. At one point, one of the identity theft protection startups even sent out a press release offering a $2 million guarantee. Which to me was comical, because it was obvious what the startup was doing...and it was, frankly, sad.
Now I'm not saying the $1 million insurance guarantee is useless, because it does provide value. Certainly there are costs associated with the cleanup and restoration of a stolen identity, and the way the services now read in the fine print is that they will spend up to a million dollars to fix your problem, which essentially is a good thing. In some cases the costs might revolve around lost wages, criminal prosecutions, lawyers (and you know how expensive they are...I do), etc. But how much might it cost to fix a stolen identity? Maybe five, 10, 15 grand? Maybe 50k? The court cases you see on TV that involve someone shooting and killing someone might cost the defendants a half million dollars. So...a million? It's marketing.
So don't base the identity theft protection on the $1 million insurance guarantee. Base it on all the ways in which they seek out your data in the wild and what they'll do to make sure you are made whole in the event of a breach.
So it's official: I have no friends left. I really need to start lying more. Sorry, guys.