I have a question which relates to the replacement cost of an iPhone. Say for example one has purchased a 16gb 1st generation iPhone for £329 from the Apple Store, takes it home and unlocks it (perfectly legally); and through unfortunate circumstances loses the phone through theft.
Assuming the phone is covered under home contents personal possesions cover, which covers the replacement of items at their replacement value, what value should the iPhone be valued at considering it is no longer in production?
A conservative approach would be to say the value of the phone is £329, what was payed right? But what if the phone is no longer in production? It cannot be replaced for £329. Instead the only replacement available is its eqivilent model, the iPhone 3g.
Now the new model is £100, or is it? In order to walk away from the Apple Store you must activate a contract in store for 18months line rental before you can legally own the phone. So the total cost to be in the position before the theft, with the iPhone in hand would be a minimum of £640 ( £100 + 18 x £30)
So here is the dilema...should the line rental not be considered an inclusive cost to replace that phone, where the purpose of purchasing that phone originally was to use it for its functional capabilities including its main use as a phone.
The insurance company have an obligation to put the customer in the position they were in before any claim, which would be to replace the iPhone. As with artwork, furniture, jewellery etc. some things cost more to replace than their original purchase price. Should this be any different with the iPhone?
O2 and Apple closely guard the true value of the iPhone and consider any subsidies to be 'commercially sensitive' information.
Many smart phones cost in excess of £600 to replace offline. Should Apple be allowed to mislead insurance companies and consumers to the iPhone's tangible value?
One way to determine the value could be to look at the market value, which can be defined as 'the price at which an asset would trade in a competitive Walrasian auction setting.' Taking Ebay as an example, new iPhones sell for £700+
I agree that it is a grey area, but if a car came crashing into your front room, would an insurance company send you a pile of bricks and tell you to build your own wall? Would they send you a carpet and tell you to fit it yourself? I think the answer the both of them questions would be no! It is accepted that a seperate contract has to be taken out for labour to rebuild the wall and fit the carpet, so should it not be accepted that Apple require activation at a cost of £540???