Mobile phone insurance: Pitfalls and perks
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The rise in mobile phones has led, inevitably, to an increase in fraud, thefts of handsets and countless numbers getting lost or damaged. The need for insurance has therefore become more and more necessary.
Mobile phone insurance requires the owner to pay a premium to the insurer who will then cover the costs if the phone is stolen, lost or damaged. Generally mobile phone insurance covers the following:
- Theft - insurance will pay for the cost of a replacement phone
- Accidental damage - insurance will pay for the costs of repair or replacement
- Loss - it will cover the cost of a replacement
- Thieves making calls - the cost of a thief's calls will be covered
Reasons to have mobile phone insurance
Your home insurance will cover the cost of replacing a damaged, lost or stolen phone. However, it will not cover the cost of any calls made on the phone once it has been stolen.
In recent years a scam has emerged where phone thieves use the devices to make long calls to high-premium phone numbers. They receive a cut for their efforts but the customer forks out for the bill. Insurance will cover any costs incurred by fraud.
How to buy mobile phone insurance
You can obtain mobile phone insurance direct from your network or provider. This allows you to pay the cost as part of your package. It also means, should you need to claim, you will receive a brand new replacement phone within days.
On the downside, these policies are often bought following the hard-sell by a mobile phone salesman - this provides no time to go away and search the rest of the market, where there might be much better deals.
Going to an insurance provider for a deal gives you more control. By visiting a price comparison website you can check out the competition. Some insurers only provide like-for-like replacements, which means if you need a new phone it will only supply a second-hand model of the same specification as your current one rather than shiny new one.
Some banks provide insurance for mobile phones as part of the perks of their current accounts - but these should be scrutinised carefully before relying on them as a sole form of protection.
Pitfalls
Mobile phone insurance has come under fire with some critics branding it a rip-off. They argue either that home insurance can cover the costs, or that a few crime-prevention steps can lower the chances of theft. However, there are still advantages and if you are set on insuring your phone the key message is to check the small print in the policy.
Some phone insurance policies cover for theft, but only where it is violent. It is also worth looking at whether your insurer will pay up if something happens to your phone when abroad. Also check the policy to see whether you need to pay an excess should you need to claim.
Check your policy to make sure, if you do need a replacement and are expecting a new model, you do actually receive a new model and not a second-hand version of your old one.
You will need to report a stolen mobile phone to the police before making a claim as your insurer will require a crime number.
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