About this guide

With the arrival of the first NZ insurance policy covering Indentity Theft, we thought it would be helpful to explore why this type of product probably has a place in today's world.

Cigna Insurance and credit reporting company Veda Advantage have teamed up to provide Identity Theft cover. It will cost $95 per year and this guide explains why this type of insurance may be of benefit to many, how it works, and if its value for money.

What is identity theft?

Last year more than 1,100 incidents of identity misuse were recorded by New Zealand Police. Identity thieves steal personal information and use your identity to steal from you "“ leaving you with liabilities that can be very hard to get out of. This fraud is also committed against the merchants who supplied the goods or services.

The result is normally devastating. Once thieves have your information, they can open new credit cards or bank accounts in your name and run up debts, take out loans or apply for a new passport or identity document.

They use your identity as a cover for their criminal activity, doing it in your name. Fraudsters may also apply for Work and Income benefits in your name or give your name to the police if they get arrested and if they are released on bail, any future arrest warrants will be in your name.

How will I know if my identity has been stolen?

There are many ways that you will be able to see warning signs that your identity may have been stolen.

This is most likely to happen after you have either lost or had stolen things like Credit Cards, Passport, and Drivers License etc. You should also become concerned if you do not receive correspondence from your bank or lender that you were expecting. This could indicate that the address has been changed, a strong indicator of misuse of your identity.

When you review bank statements, check them carefully for any unusual transactions. If you're suspicious about any activity then contact your bank or credit card company immediately.

Make sure you shred receipts, statements, bills and official forms before you throw them away as some fraudsters steal your identity by retrieving bank statements and bills from your rubbish bins.

How does ID theft occur?

Unfortunately the methods of stealing ones identity are many and varied. These range from activities like going through your mail box looking for items like credit cards to electronic eavesdropping.

Just getting access to statements can help a fraudster trick others into supplying credit in your name.

Handbags left unattended can be easily rummaged for identity items like drivers licenses, credit cards, passports and even student identity cards.

However the area that is growing very fast is the theft of items obtained from your electronic files.

This could be by accessing your details over a unsecured wireless networks or the popular 'phishing' approach of sending you an email asking you to log on to a sight that looks like one you may regularly visit, and in the process stealing your login details. Once this has been done, the identity theft process can then commence and your identity is well on the way to being hijacked.

How to avoid becoming a victim

1. Change your mail to receive it electronically.
2. Make sure you have any wireless network encrypted and install a firewall to avoid any access to your systems
3. Do not write down passwords or PIN numbers. It's easier to get these reissued than running the risk of them being stolen
4. Never respond to a telephone or email request that asks you to disclose usernames or passwords
5. Always sign your credit cards immediately you receive them and never leave any lying around unsigned
6. If you are moving address then use mail redirection services available from NZ Post. Don't run the risk of others seeing what mail is arriving for you
7. Only give out your details to someone when you have initiated the conversation. If someone calls you from a financial organisation you deal with then offer to call them back and do so through the main switch board to make sure the person is legitimate
8. If you lose any items that can be used for identification then notify the issuer immediately

Do I need ID theft protection?

Ask anyone who has been through the misfortune of identity theft about how expensive the exercise can be and the answer is therefore probably yes. But the risks are still small in New Zealand. Those 1,100 cases the Police handled last year affected 0.025% of all adults. Undoubtedly the reported cases are only a proportion of actual numbers involved. Overseas experience suggests a wave of identity theft is likely to hit New Zealand sooner than later.

The Cigna policy covers you for associated legal costs of up to $10,000 and $600 reimbursement for your time.

Importantly it also provides you with a report from Veda Advantage every time your credit details are accessed by a lender. This is an important safeguard to give you an early warning of inappropriate activity.

Who offers identity theft protection?

The only provider in New Zealand at the moment is Cigna Insurance and we will update you when other providers make products available.

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This guide was completed by John Grant who edits the insurance coverage on interest.co.nz