The havoc wreaked when your identity has been stolen and misused is hard to undo. Not only is your credit compromised, you could end up the target of an arrest warrant. Collection agencies could be nipping at your heels demanding payment for outstanding bills on things you never bought, or your retirement funds could be wiped out. Charlie Weidman found out the hard way how devastating identity theft can be. In 1992 his identity was stolen, but he didn't find out until 2000 when he discovered hospital bills and outstanding arrest warrants in Florida and Washington, all in his name. But things weren't as bad as they could have been. The Liberty Mutual policyholder had identity theft coverage. The company was willing to help financially, but could not do much for the legal aspects to regain his good name. Weidman ended up taking his case to a professional identity recovery business and paying $1,000 to complete the process. Yet, he says, identity theft insurance is worth the money. "If you don't like what they are doing to solve the problem, the insurance will cover your costs to find a company that will." "Identity theft has been the No. 1 consumer complaint to the Federal Trade Commission for the past six years," said Claudia Bourne Farrell, spokeswoman for the commission. Everyone is subject to identity theft. According to the Federal Trade Commission more than 9 million people a year in the U.S. are victims. "Many people do not even know they are a victim until they apply for a new loan," said Catherine March, insurance agent at Liberty Mutual Insurance in Boulder. "By the time the situation is straightened out, the loan will most likely fall through, and a nonrefundable application fee is lost." Although most insurance companies do not have the capability to clean up the havoc left behind, many do offer compensation for costs incurred during the cleanup process. Identity theft insurance can be added to homeowner or renter insurance. The insurance covers loss of wages, airline tickets, phone calls, postage and finding a professional identity recovery company. Liberty Mutual offers Identity Fraud Expense Coverage for $25 per year, which covers the client for $15,000 per incident up to $30,000 total. Nine out of 10 of the 100 policies she sold last year added this type of insurance, March said. The key to stopping identity theft is prevention and early detection. Prevention includes filing for credit reports a minimum of two times per year to verify that no unauthorized activity has taken place, along with shredding receipts and credit card offers. People should not give out bank information, driver's license or Social Security numbers to any person or Web site until verified as secure. Allstate Insurance offers clients Identity Restoration Coverage for up to $25,000, which includes $250 per day for lost wages and $2,000 to hire a firm to represent clients in court. The cost is $40 per year. Tom Ray, owner of an Allstate agency in Longmont, said this type of insurance was put together because of the growing problem. "People do not understand the costs involved to defend themselves from things they did not do. You end up feeling victimized twice because your identity is taken, and then you have to pay someone to have incidents removed from your credit report." Identity theft does not just affect finances. In some cases, people who have been victimized will be denied a job because criminal activity is revealed during a background check. "People commit crimes using other people's identity in states where victims have never been," Ray said. "Sometimes a background check at a job reveals you are a felon, and there is a warrant out for your arrest." In many cases it is up to businesses to determine if fraudulent activity is taking place. Arizona-based Fiserv Inc.'s Business Development Fulfillment Services Division, which has offices in Boulder, offers a product called IdentiFI to help lenders in the mortgage industry determine if the person requesting financing is who they say they are. "A mortgage lender is given certain criteria such as name, social security, phone number and driver's license," said Fiserv Vice President Debbie Sutherland. "We ping the Experian credit report's database for information. Someone then looks to see if the information is a match, or if there are flags such as a wrong ZIP code for the phone number, the address is for an office complex, or the person is listed as deceased."