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In this article, we’ll cover questions to consider when evaluating an identity protection benefit, including whether the reimbursement offered includes pre-existing incidents, scam losses, and more.
An identity protection benefit can help your employees protect themselves from identity theft. But with data breaches and the sophisticated nature of identity theft, the reality is simple: no protection program can prevent every incident.
If you're considering an identity protection benefit for your employees, there’s an important question to consider: can this benefit adequately protect my employees’ finances in the event of an identity theft or fraud event?
With Americans losing $47 billion to identity fraud and scams in 2024, this question is more important than ever. If your identity protection benefit leaves employees covering costs related to stolen funds, legal fees, lost wages, and more, an identity theft incident can devastate their finances and leave them struggling to cover basic costs like rent, groceries, and other essentials.
Below are some of the most important reimbursement questions to ask when evaluating identity theft benefits.
Does it cover pre-existing identity theft issues?
Whether they are new hires, late enrollees, or employees who previously opted out, people dealing with an active identity theft issue often need support the most. A benefit that excludes pre-existing issues may reduce the real-world value of the program for exactly the employees who need help right now. This is especially true when you consider that if identity theft isn’t resolved correctly, a victim is at greater risk of experiencing additional identity theft incidents, compounding the effect of these incidents.
A stronger approach is to look for a benefit that includes support for employees once they enroll and can help them address identity-related problems already in progress, without added fees, lower payout caps, or policies that make the protection harder to use.
Does it cover stolen funds?
One of the biggest misconceptions in the market is that “identity theft insurance” automatically means money stolen from bank accounts, investment accounts, and other assets will be reimbursed. But victims often discover a nasty surprise when they go to recover these funds—their coverage doesn’t reimburse them.
Some programs only reimburse the costs of recovery—such as legal fees and notaries—rather than the stolen funds themselves.
The importance of stolen funds reimbursement is even more important with the rise of account takeovers, with account takeover fraud resulting in $27.3 billion in losses in 2025.
Does it cover losses related to scams and other digital crimes?
Social engineering scams are becoming increasingly common. These scams include situations where a criminal impersonates a trusted entity and manipulates the victim into sending money themselves. A criminal may pretend to be:
A bank
A government agency
A tech support representative
An employer
And with the rise of AI, these scams are becoming more convincing, potentially leading to more losses.
But social engineering scams aren’t the only scams that consumers need to watch out for. With shopping scams, investment scams, and more, consumers face a wide range of fraud risks. In fact, Javelin reported that Americans lost $11 billion to scams in 2025 alone.
The challenge is that reimbursement rules often depend on how the payment happened.
Under the Electronic Fund Transfer Act, banks and other financial institutions are generally required to investigate and reimburse unauthorized electronic transfers, such as a debit card theft or account access by a fraudster. Consumers who report an unauthorized electronic transfer promptly may have important protections under Regulation E, and banks generally must investigate within 10 business days.
But if a victim was tricked into authorizing the payment themselves, the situation can look very different. The Government Accountability Office (GAO) says financial institutions are generally not required under federal law to reimburse consumers for fraudulently induced payments when the consumer technically authorized the transfer, even if they did so because of deception.
For employers, the takeaway is clear: an identity theft benefit should not assume employees will be made whole by their bank. It should offer meaningful support when financial institution reimbursement is partial, delayed, disputed, or denied.
Does it cover Health Savings Accounts (HSAs) and 401(k) accounts?
When fraud reaches high-value accounts such as HSAs and 401(k)s, the impact can be significant.
These accounts often represent long-term savings, future healthcare security, or retirement planning—not just short-term cash flow. And when criminals get access to things like email accounts, Social Security numbers, and other personal information, it can be a fairly straightforward process for them to gain access to these accounts and wreak havoc.
That makes it especially important to understand whether reimbursement coverages apply to these accounts, or whether they are excluded by policy language.
How much does it really cover?
This is the most important reimbursement question of all—and often the hardest one to answer from a benefits summary alone.
Two plans may each advertise the same headline coverage amount, but deliver very different outcomes because of:
deductibles
exclusions
sub-limits by expense type
waiting periods
enrollment restrictions
documentation requirements
preconditions tied to monitoring or account registration
That means a plan that looks comparable on paper may leave employees with very different out-of-pocket outcomes after a real incident.
Employers may want to look beyond the top-line reimbursement amount and ask what is actually reimbursable, and what conditions apply—especially in cases involving scams, account takeover, or unrecovered funds.
Clear reimbursements can help reduce employee stress.
Identity theft and fraud are disruptive enough on their own. The last thing employees need is a reimbursement process that creates more work, more uncertainty, and more financial pressure.
An identity theft benefit doesn’t just help detect fraud. It can help employees recover with less friction, less out-of-pocket exposure, and less time spent fighting for reimbursement from multiple institutions.
To learn more about how Allstate Identity Protection can help your employees protect their finances, visit our employers page.