Identity theft is one of the fastest growing crimes in America. Why? Because thieves are getting smarter, electronic monitoring devices are highly sophisticated and because the victims are too trusting.

We lull ourselves into a false sense of complacency thinking it will only happen to someone else. Think again. The Justice Department estimates that almost four million households were hit last year alone. This means that more than 25,000 individuals are victimized every day of every year. Those are better odds than winning the lottery and this is one chance you don’t want to take.

Many of these cases only involve a stolen credit card number. And, that’s bad enough. But, many involve the more serious crime of stealing your identity by opening accounts and obtaining a fake ID in their name. They’re pretending to be you and you’ll be paying the bills they incur. How much damage they can do depends largely on how soon you discover the problem.

Thus, identity theft insurance companies are thriving in an effort to give you some peace of mind. Many people are willing to spend a few dollars a month to breath easier and feel their credit and good name are no longer at risk. You probably get numerous solicitations to purchase identity theft insurance in the mail and offers on the phone.

Know what you’re buying. Read the fine print and ask questions before making a decision. Most policies do not protect you from becoming a victim and won’t cover direct monetary losses you might incur if you’re a victim of identity theft.

What does it cover? Most simply cover a small percentage of expenses incurred as you make efforts to resolve the mess. The expenses incurred are usually defined as phone calls, fees for making copies and the postage for mailing these documents. Some do cover a portion of any legal fees incurred or lost wages due to time away from work while you work on the problem. Some don’t.

Keep track of your expenses while resolving the issue because your insurance deductible could range as high as $1,000 a year. Most deductibles are under $250 depending on the amount of your premium. The Federal Trade Commission says the average victim spends less than $1,500 to recover and resolve the problem.

The burden of dealing with your creditors ultimately falls on you because they refuse to deal with anyone not responsible for owing the money whether actual charges or bogus.

Another caveat on identity theft insurance: If the theft is committed by a family member, you’re usually not protected and a great percentage of ID thefts are committed by someone you know.

Check your homeowner’s policy to see if you’re already covered. Some credit card companies provide ID theft insurance for free if using their card and some will notify you if there appears to be unusual activity on your card.

Whether you purchase identity theft insurance or not, keep vigilant on ways to prevent ID theft on your own. Protect your social security and credit card numbers, shred documents before discarding them and monitor your credit reports often.