A few years after watching a thief run up charges on a fraudulent credit card, Kermit Cottrell knows what it’s like to have his identity heisted.

Now he’s just happy he can keep his customers from suffering some of the same pain.

“Anybody who’s been through it, they know the hassle,” said Cottrell, an Allstate agent based in Lawrence. “It took years to get out of that.”

Cottrell is among a growing number of insurance agents who offer polices to cover costs associated with the aftereffects of identity theft. It’s a business that he’s confident will continue to grow, as reports of compromised databanks and other repositories of financial data continue to make news.

Late last month the agent started offering riders on homeowners’ policies, to cover the costs of recovering from the effects of an identity theft. The $30-a-year policies cover costs for attorney’s fees, lost wages, long-distance phone calls and other expenses that pile up when an identity is stolen.

“It gives you the resources to deal with it, and takes the stress out of the process,” Cottrell said. “You don’t have to worry about losing your income. You don’t have to worry about losing your paycheck. If you need an attorney, you can afford to hire one.

“The resources are there.”

Company coverage

Charlene Bailey, a spokeswoman for the Kansas Insurance Department, said that such policies were becoming increasingly popular among consumers and insurers alike.

Among the companies licensed to sell such polices in Kansas, according to the department:

¢ Allstate: $30 annual fee, no deductible, $2,000 limit on retaining legal assistance, $5,000 limit on lost wages.

¢ Farmers Insurance Co.: $25 annual fee, $100 deductible, $15,000 limit on expenses with no restrictions on how it is to be spent.

¢ Farmers Insurance Exchange: $25 annual fee, $100 deductible, $15,000 limit on expenses with no restrictions on how it is to be spent.

¢ Travellers Insurance: $25 annual fee, $100 deductible, $15,000 limit on expenses with no restrictions on how it is to be spent.

Other companies offering coverage include American International Group Inc., Chubb Corp., Fireman’s Fund Insurance Co. and Metlife Inc., according to the Los Angeles Times.

Consumers interested in such coverage first should inquire with their current insurer or insurers, Bailey said.

But like with any insurance, Bailey said, the decision about whether to secure such coverage is a personal decision. She likened the identity-theft protection to wedding insurance, a specialty product that appeals to some people but by no means all consumers who could face a disaster.

“But it can be a cheap investment for a good night’s sleep,” Bailey said.

Seeking protection

A recent survey by graduate students at Boston University found that Americans were willing to pay an average of $88 a year for such peace of mind.

The online survey of 1,049 U.S. adults found that more than four out of five agreed that identity theft was a “major problem,” and that nearly a third said they were “very concerned” that they could become victims of such fraud during the next five years.

Nearly three out of four adults surveyed said they would be willing to pay for insurance coverage to take care of their credit histories, bank accounts and credit accounts in the event that their identities were stolen. The most willing purchasers: young professionals with incomes of $45,000 or more.

Cottrell, now in his 18th year of selling insurance, said he’d never had such an easy-to-sell product. He sent out cards announcing the coverage to his holders of homeowners’ policies, and 40 people signed up during the first week.

“So far, I’ve never mentioned it to anybody and not have them take it,” Cottrell said.

Cottrell wishes he would have had the coverage himself a few years ago. That’s when someone used his name to secure a credit card at a furniture-rental business in Atlanta.

While the thief managed to get the card by using a “made up” Social Security number and date of birth, Cottrell said, the agent couldn’t shake the negative hits on his credit reports. Repeated phone calls, letters and other follow-ups finally cleared his name, but not after plenty of time, money and effort expended on his part.

The only comfort: Now he knows what it’s like to face the problems caused by identity theft, making it easier to understand the concerns of his clients.

“Believe me, I know what it’s like,” Cottrell said. “It can blossom on somebody real quickly.”