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Rise of identity theft scams highlights importance of identity insurance

Statistics from the South African Fraud Prevention Service (SAFPS) reveal that a shocking 23% of all fraud cases filed at its offices are linked to impersonation. The rise in identity theft points to the importance for all South Africans to ensure they are financially protected against any losses suffered as a result of their identity being unlawfully used by another party.

There was recently the case of a Johannesburg couple involved in an insurance fraud scam involving 147 claims and 100 different identities.

In an effort to combat the growing problem of identity theft and fraud, the Department of Home Affairs introduced smart identity cards that use modern biometric technology to record a wide range of personal details on a memory chip. The information stored on the new smart identity cards includes a person’s marriage licence, drivers’ license and personal identification.

While this is a positive step to reducing fraud, consumers still need to remain vigilant and protect themselves against the financial risks of having their identity stolen. In order to reduce the financial risks of identity theft of the kind of information stored on the new smart identity cards, consumers need to ensure that they have proper insurance cover in place.

Cyber liability and online identity theft is increasing globally. This seems to be the newest form of White Collar crime, which is why it is vital that consumers constantly protect all personal information.

Whilst most personal insurance policies do include identity theft cover automatically, speak to insurance providers to enquire whether such cover exists in the current policy and to what extent the consumer is covered. Whilst you may have some level of protection in your insurance cover, not all policies are the same and you may be exposed to additional financial risk if you do not have adequate cover in place.

Identity theft is extended under the Personal Liability section of a personal insurance policy. This cover will protect the consumer in the event of becoming liable as a result of a third party unlawfully using the insurer’s personal information, which could include the use of identity books, passports, drivers licences, bank details and municipal account.

Identity insurance cover will generally cover the insured for legal defence costs incurred in proving liability against unauthorised third party use of personal information, costs incurred in removing any wrongful civil and criminal judgement against the insured and income lost due to resolving identity theft matters.

Consumers are able to protect themselves against the risks of identity theft that could result in substantial financial loss. This can include keeping important documents in a safe place, having limits on bank accounts, shredding old documents and cards which are no longer in use, changing passwords regularly and ensuring that no personal information is too detailed on social media platforms.

Warwick Scott-Rodger is Head of Brokers at MUA Insurance Acceptances.

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