Eight reasons to avoid mobile phone insurance
By Ben Salisbury
It may seem amazing that 35 million mobile phones are not insured in the UK despite the increased popularity of expensive smartphones like Blackberries and iPhones, but when you look at the quality, cost and level of cover of mobile phone insurance policies it is hardly surprising.
Recent research released by the British Transport Police shows that there has been a 22 per cent increase in the number of muggings for mobile phones. This seems to have risen as the plethora of expensive handsets available has grown.
You have to be careful with all types of insurance policies to make sure that the cost of the policy is worth the expense and provides the right level of cover for your circumstances, but this is particularly true with mobile phone insurance.
Scams
The first reason to be wary of mobile phone insurance is that there has been a large increase in the number of scams associated with it.
There have been several instances when a consumer who has just bought a new mobile phone has received a call almost immediately afterwards from someone purporting to be from a mobile phone insurance company offering them a policy.
Many people have been taken in and signed up for the product supposedly on offer only to discover that it is a scam. Many people don’t realise that they’ve been scammed until they try to make a claim. This is something that Trading Standards are investigating.
Eight reasons to avoid mobile phone insurance
You may not be covered for fraudulent calls
Just 35 per cent of mobile phone insurance policies cover the consumer for fraudulent calls. These are the calls made between the time you lost the phone and when you reported it and had the sim card cancelled so no one can use it.
Mobile phone insurance is very expensive
Depending on the value of your mobile phone the insurance cost could soon overtake the actual cost of the phone in the first place. I checked out the cost with Vodafone for my fairly standard Nokia handset which I received free on signing up to a basic 12-month contract costing £10 a month. I was appalled to be quoted an estimate of £6 a month – that is £72 a year! To rub salt into the wound they also quoted me a £25 set-up fee!
The cost if I owned a smartphone would have been £13 a month. This comes in at a hefty £152 a year. If you are thinking of taking out mobile phone insurance you should ask yourself if it is really worth it.
Check the terms and conditions
This could take sometime because mobile phone insurance providers issue a huge number of caveats that allow them to wriggle out of their obligations when it comes to recompense should your phone be lost, damaged or stolen.
So, after paying a hefty premium there is no guarantee that you will be covered depending on the particular circumstances. I have heard reports that someone was sitting outside at a restaurant eating a meal when someone ran past their table and swiped their mobile from the table and the claim was turned down because they were not deemed to be taking sufficient care of it.
You may be covered by other insurance policies
Check to see whether you are covered through your home insurance contents policy. If not, you can apply for an upgrade to your policy that covers your personal possessions when they’re not in your home. Typically, this will only cost around £20 extra a year and will cover you for other items such as a laptop or iPod too.
Most contracts upgrade your mobile regularly anyway
If you have a mobile phone contract it is very likely that you will be offered an upgrade to your phone every 24 months. Check this out and if you lose the phone fairly close to the time when you are due an upgrade, you are better off waiting until you receive your new phone.
It is a lot of hassle to claim
Usually you will have to provide a police report and possibly other paperwork in order to submit a claim. This can be time-consuming and inconvenient, especially if the value of your phone is low.
You may be covered by the manufacturer’s warranty
Depending on the circumstances you may already be covered. All mobile phones come with one year’s warranty as standard and some come with more than that. So, if your mobile has a technical fault, you may already be covered. A manufacturer’s warranty will not cover loss, accidental damage or theft.
High excess fees
You may well have to pay an excess of up to £75 to make a claim on your mobile phone insurance policy. In many cases this is close to the cost of the phone, so you would be better off just buying a new one and not wasting your money each month on an overpriced insurance policy that may not cover you anyway.
Read more: Is it worth having card protection insurance?
Top three reasons why claims are turned down
The most common reasons that mobile phone insurance claims are turned down are as follows:
1) The consumer did not report the theft of the phone and did not get a crime number.
2) Calls have been made from your phone since the theft. For the insurance to be valid, you have to get your sim card de-activated. If someone else is using your phone then the insurance company will think you are trying to pull a fast one if they note usage after the date of theft and won’t process your claim.
3) The damage done to your mobile is seen as different by the insurance company than what was reported: You have to send in your old mobile to be inspected and if it doesn’t look like the same damage has been done as was reported, your claim will be invalid.
What to consider before you buy
If after reading this you still feel that you require mobile phone insurance then this is what you need to consider.
- Will the policy cover you for calls made by someone else if your phone is stolen?
- Will it cover family members if they have been using the phone?
- Will it cover mobile phone accessories?
- Will it cover you for accidental damage as well as loss or theft?
- Will you be covered when you are overseas?
- How much will the excess be?
- Does the insurer have their own data backup service to protect the contents of your mobile phone?
- Is there a minimum policy term?
- Is the cost of replacing downloaded applications and other media that did not come with the phone covered?
- Are there any administration fees when a claim is made?
The best options
If you are set on taking out insurance you should avoid cold call offers and the protection offered by your mobile company. Do the research yourself to find the best deal.
After a quick search I found reasonable cover from just over £30 a year, which is £2.50 a month - much more reasonable. Check these two sites: insurance4mobiles.co.uk and insureyourmobile.co.uk.
The alternatives
As mentioned earlier, taking out an extra addition to your home insurance policy to cover your mobile and other items away from your home will be, in most instances, a better-value option than a stand-alone mobile insurance policy.
Alternatively you could put aside a small amount of money each month and create a mobile fund to help you buy a new one in case anything happens to your existing mobile phone.
Save your old mobile phone and use that if the worst happens. You can pick up a duplicate sim card for cheap and put that in an alternative mobile.
Use the Myfinances.co.uk comparison tools to find the best type of insurance for your car or home.
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