Oh, No! My Identity's Gone! Call the Insurer. - New York Times: "It may not come as a surprise that the insurance industry has found an eager market for a timely product: identity theft insurance. Before you start enjoying warm and fuzzy feelings of security, know that such insurance does not cover the thousands of dollars that thieves may rack up using your good credit; in fact, consumers are usually responsible for a maximum of $50. Rather, it is meant to reimburse, as much as possible, for the time and out-of-pocket expenses involved in purging the bad credit.
It can be bought either as part of a homeowner's policy or as a stand-alone endorsement. It's free or cheap - usually no more than $50 a year, depending on the policy. And that generally covers up to $25,000, according to the Insurance Information Institute (www.iii.org).
Indeed, if you have a homeowner's policy, check with the insurance agent; you may already be covered and not know it."