Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
Updated on Friday, January 27, 2017
If you register an account with Credit Sesame, the credit monitoring and financial recommendations company now provides an unconventional perk: a free identity theft insurance policy with $50,000 worth of coverage.
Identity theft insurance, like the insurance offered by Credit Sesame, helps victims of fraud to recoup money they may spend to resolve the issue. In minor cases of fraud, victims may have to pay for notary expenses, to freeze and thaw their credit, or to replace a visa, passport, or driver’s license. In serious cases, victims may lose wages when they take time off from work to deal with identity theft. Some victims may even have to pay for legal representation.
Without insurance, it is possible — but not always the case — that victims might have to pay out of pocket to resolve cases of identity theft.
Credit Sesame’s identity theft insurance policy might be “free,” but is it worth getting excited over? We took a closer look at the policy and compared it to similar offerings from competitors.
Here’s what we found.
Yes. It really is free.
Free sounds good, but it’s usually filled with gotchas. Is Credit Sesame’s identity theft insurance really free? Yes. It’s real insurance, and you really don’t have to pay. Despite the $0 price tag, the insurance policy isn’t half bad.
What Credit Sesame’s policy covers:
With a few exceptions, Credit Sesame’s policy covers:
- Application re-filing fees
- Courier costs
- Notary costs
- Court costs
- Legal representation (up to $75 per hour)
- Lost base wages if you need to take time off from work (self-employed people can’t receive any compensation)
- Dependent care coverage
- Travel costs
- Postage or other communication costs
What Credit Sesame will not cover:
Credit Sesame’s insurance never replaces stolen money that has been taken from a bank, savings, or other financial account.
Like most other identity theft insurers, Credit Sesame also won’t reimburse identity theft costs if the theft occurred under suspect conditions.
- Credit Sesame will not cover fraud perpetrated by the victim or a family member of the victim.
- They will not reimburse customers who voluntarily gave up their account numbers.
- They only cover cases of identity fraud. That means if the fraudulent activity occurred because the victim or a bank employee made an error, the victim can’t get reimbursed for those costs.
Is that enough insurance?
Most of Credit Sesame’s competitors (and Credit Sesame’s premium product) offer up to $1 million in identity theft recovery services, so a $50,000 policy may seem skimpy. But bigger policies don’t necessarily offer better benefits.
Many million-dollar ID theft policies aren’t a great deal. You’re unlikely to spend thousands resolving identity theft. According to the Federal Trade Commission, most people spend just $40 for resolving identity theft. Five percent of identity theft victims spent more than $2,000 resolving identity theft.
The highest potential cost associated with identity theft is the cost of legal representation. Credit Sesame’s policy offers to cover $75 per hour for legal needs. But some attorneys can charge much more than that. According to Lawyers.com, a database that matches consumers with lawyers, most experienced lawyers charge $100-$200 per hour. So if a victim has to hire a lawyer, Credit Sesame’s policy may cover only some of their legal fees.
You might be worried that Credit Sesame doesn’t reimburse stolen funds, but in most cases banks will reimburse you anyway. The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) protect consumers from having their accounts drained.
The FCBA assures that you have to pay a maximum of $50 in fraudulent charges on a credit account. Your credit card company will reimburse your for the rest. In fact, most credit card companies have $0 fraud liability. That means you don’t have to pay for any fraudulent charges at all.
The EFTA covers you if someone steals money from your checking account. As long as you report fraud on your checking account within 48 hours, your bank will reimburse you for all but $50 of the charges. If you wait 2-60 days, the bank could leave you with $500 in losses.
Unless you have significant assets in a brokerage account, you’re legally protected. In the rare case that the law doesn’t protect you, your insurance probably won’t either. Most ID theft insurance companies limit their reimbursement of stolen funds to somewhere between $10,000 and $25,000.
Is it worth signing up for a Credit Sesame account?
Credit Sesame’s insurance is a useful tool to limit financial exposure, and it can be a part of your plan to protect yourself against identity theft. But the reality is you probably don’t need identity theft insurance. You may prefer to keep your email address to yourself rather than get blasted with emails from Credit Sesame.
Most people can handle the $40 out-of-pocket fees associated with identity theft. Even $2,000 of costs can be manageable if you have an emergency fund.
When it comes to identity theft, the biggest cost you’ll face is the cost of your time. On average, victims spend four hours unraveling identity theft issues, and 5% of victims spend more than 130 hours. Credit Sesame’s insurance product won’t help you with that.
If you want identity resolution services, you can get them as a free perk from several credit cards, including:
- Capital One® Quicksilver® Cash Rewards Credit Card – $0 annual fee
- Capital One® VentureOne® Rewards Credit Card – $0 annual fee
- Trio Credit Card from Fifth Third Bank– $0 annual fee
- Points Rewards World MasterCard from Patelco Credit Union– $0 annual fee
You can also compare identity theft monitoring and resolution services on the MagnifyMoney website to find a product that suits your needs.
How to sign up
In order to take advantage of Credit Sesame’s ID theft protection, you’ll need to sign up on the site using your email address. You’ll provide personal information, including your Social Security number and your address. You cannot get free insurance unless you complete your Credit Sesame member profile.
Is it safe to provide this information? Credit Sesame promises that they will not give or sell your information to third parties without your express permission. They use multifactor authentication, which makes it difficult for hackers to take your information from their website.
What’s the catch?
The value of Credit Sesame’s insurance protection policy may not be worth the cost of handing over your email address. Customers are bound to receive marketing emails from the company, encouraging you to visit the site to check your credit score. Once on the site, you’ll receive recommendations to sign up for certain credit card or financial products that may or may not be best for your needs.
Eventually, Credit Sesame will nudge users to upgrade their Credit Sesame service.
Credit Sesame pushes their premium service offerings to existing customers. If you pay more, you can get up to $1 million of insurance and more monitoring. The additional insurance coverage still won’t reimburse you for stolen funds that your bank won’t replace.
The costs for these products include:
- $14.95 for monthly reports from the three credit bureaus.
- $19.95 for credit resolution help from an assistant.
- $24.95 for lost wallet resolution assistance and dark web monitoring.
These prices are higher than competitors, and Credit Sesame’s product doesn’t offer full resolution coverage at any price.