(MONEY Magazine) – Although there are no statistics on the prevalence of identify theft, experts say that the fraudulent use of names, Social Security numbers or credit cards is on the rise. What's certain is that many consumers fear identity theft--and many companies are happy to allay those fears with new products. The latest is identity-theft insurance.

Since March, Chubb (www.chubb.com; 877-602-4822) has made identity-fraud insurance a free provision in all homeowners and condo policies. The insurance, available in 27 states, covers up to $25,000 in expenses incurred to clean up your credit, including unpaid leave from work and legal fees, with a $500 deductible. Travelers (www.travelers.com) charges $25 a year to add similar coverage (up to $15,000, $100 deductible) to homeowners, condominum or renters policies in 29 states. In July, Travelers began to test a stand-alone policy in nine states, with premiums starting at $100 a year (800-808-4514; www.usinsure.com).

So should you get identity-fraud insurance? No, if you believe the basic rule for any insurance: Insure only against catastrophic risk and cover relatively small losses yourself. A report by the California Public Interest Research Group and the Privacy Rights Clearinghouse found that identity-fraud victims spend an average of 175 hours and $808 repairing the damage. Fraudulent credit-card charges averaged $18,000, but you're not responsible for those losses (see "Credit Cards," above right). Says Robert Hunter, director of insurance at the Consumer Federation of America: "If the insurance is a free add-on, I'd take it, but it's not worth $100 a year."

To cut your chances of becoming a victim of identity fraud, call 888-567-8688 to have your name removed from the major credit bureaus' mailing lists for pre-approved credit. If you're victimized, call the Federal Trade Commission's hotline at 877-438-4338.

--ROBERTA KIRWAN