Most identity theft victims never find out that someone has made money out of their identities until an angry collector calls or a credit card is denied. By the time the victim realizes that his identity has been used, the identity thief is long gone, leaving much damage to the victim's name and credit record. Although the victim of identity theft is not responsible for the debts incurred by the identity thief, he will be stuck in cleaning up the damage done to his or her credit history. Restoring your credit and your name is a slow and painstaking process that requires countless phone calls, letters, emails, and even time from work and family. Here is where identity theft insurance comes in.

Identity theft insurance helps victims cope with the cleanup. It provides reimbursement to identity theft victims for the cost of restoring their identity and repairing credit records. With some companies, identity theft insurance is included as a part of their homeowner's insurance policy. Others sell it as a stand-alone policy or as renter's insurance policy or an endorsement to a homeowner's insurance policy.

Basically, identity theft insurance coverage includes fees for reapplying for loans that were denied due to erroneous credit information, notary and certified mailing costs for completion and delivery of fraud affidavits, phone charges for calling financial institutions like banks and credit card companies, merchants, and law enforcement agents to discuss the fraud, attorney's fees, and lost wages as a result of time taken off from work to deal with the fraud.

With identity theft insurance, a victim can start picking up the pieces. But even if the victim is reimbursed all the fees and other costs, the emotional trauma from such an experience will not be easily erased by any amount.