Mobiles are easily lost, prone to damage and a target for theft. Some users will take out mobile phone insurance cover to get some financial protection. Is it a good idea to buy a policy and are there any alternatives worth using that could also save money?
What is Mobile Phone Insurance Cover?
A mobile insurance policy basically works like any other form of insurance. The consumer pays for cover that will offer them various financial benefits in the event that something happens. So, for example, if a phone is lost, stolen or damaged, then they may be given a replacement handset. Some policies will also add additional features such as water damage, unattended theft and fraudulent call protection. Policies can be purchased from phone providers and from general/specialist insurers.
Is Mobile Phone Insurance Cover Worth it?
If a user buys cover and then makes a successful claim, then they may feel that the insurance was worth the money. The phone's value and its payment type may, however, play a part in the decision-making process. A cheap PAYG handset may cost a lot less to replace than a smartphone. It may even be cheaper to pay for replacement than to buy a policy. Those with more expensive handsets or pay monthly contracts may, however, find it more useful to have protection as their financial losses could be higher. Parents giving mobiles to kids may also have an increased need for insurance.
What Will a Mobile Insurance Company Offer?
It's worth looking at the protection offered before deciding whether a policy is worth buying. Insurance will not save money if it will not pay out when there is a problem. Some mobile phone insurance cover will not accept claims if a phone is water damaged or stolen unless the theft happens "by force". Other policies may cover these events as standard. Some may also exclude certain types of claims on some handsets (usually more expensive models such as iPhones) and specialist products may have to be used instead.
Alternatives to Mobile Phone Insurance Cover
Some users will opt to simply not take out a policy. Others may have alternatives in place already and may not need to pay for a stand-alone product. Those with home insurance that covers possessions out of the home may find that this includes their mobiles. Adding this element may also work out cheaper than paying for specialist cover. Handsets may also be protected as a benefit by some premium bank accounts. Again, terms, conditions and exclusions need to be investigated here to get adequate protection.
Look Out for Mobile Phone Insurance Scams
According to the FSA (Financial Services Authority) UK consumers should be aware of mobile insurance scams. These often occur shortly after a handset/contract purchase but can happen at any time. The user will be called by a company selling policies that claims to be part of/working with the store or network provider that sold the phone. Some individuals have been scammed into paying for protection that doesn't actually exist. Those that wish to check the credentials of insurers can always use the FSA Register to check credentials.
Those looking for new mobiles may find it useful to learn more about how to choose the cheapest mobile phone contract. Those planning upgrades with old handsets to dispose of could help defray new handset/contract costs by selling old mobile phones online.
Source: FSA
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
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