How to insure your mobile phone

The insurance industry regulator, the Financial Conduct Authority (FCA), has criticised how mobile phone insurance is sold, calling it unclear and unfair to consumers. That makes it more important than ever to know what to look out for when buying.

The FCA has been investigating sales of mobile phone insurance and has just published a report of its findings, saying it will force the industry to improve the situation.

Here’s everything you need to know about buying mobile phone insurance (MPI), along with a look at the FCA’s investigation.


Slow, unclear and unfair

Ofcom says 92% of adults in Britain own or use a mobile phone – that’s around 50million of us – and the FCA report notes that, for many young people, MPI is their first exposure to the world of insurance.

It’s an increasingly popular product, says the FCA, but its findings suggest there’s a gap between what’s actually being sold and what phone users think they’re buying.

The FCA’s investigation of nine unnamed firms found some policies weren’t designed to meet the needs of consumers, and that their terms and conditions were not always clear or fair.

It also found examples of poor sales practices, slow and unfair claims handling and, finally, that some firms aren’t following complaints handling rules.

The watchdog is going to work with consumer groups, firms and industry bodies to sort it all out, but forewarned is forearmed – so let’s look at what you need to know when buying mobile phone insurance.

What are my options?

You’ve got a shiny new smartphone and you want to keep it safe. Insurance is a good idea, but there are a few different insurance options to choose from – so which is best?

Basically, there are four ways to get cover for your mobile:

  • From your network
  • From a third-party insurer
  • With your bank account
  • Through your home insurance.

Network insurance

If you go into a mobile phone shop and buy a phone, they’ll probably try to sell you insurance.

You can expect to pay anywhere between £5 and £15 per month for cover, depending on your network. It can be an expensive option, but it might be a good if you can’t bear to be without your phone for long, as you tend to get a replacement pretty quickly after filing a claim via a network’s own insurance.

O2, for instance, says that 80% of phones covered by its insurance that are lost or stolen are replaced the next day with a new phone, rather than a cheque for the sum insured.

The policy excess (the amount you pay yourself towards the cost of the claim) ranges from £25 for a standard policy to £120 on a Premier policy for iPhone where it’s your second or more claim.

Third party insurance

This is probably the cheapest option – but you shouldn’t buy based on price alone because you might not get the cover you actually need.

Companies like helpucover and Protect Your Bubble tend to be cheaper than the networks. For example, the former will cover an unlimited number of gadgets with up to £1,500 worth of cover per year for £12.99 a month.

Considering this would cover your phone, laptop, tablet, MP3 player and any other gadgets, it’s actually quite a bit cheaper than going with a network. It also covers items owned by other members of your family at the same address and protects against unauthorised airtime usage up to £2,000 on a contract and £500 on Pay As You Go.

Helpucover is underwritten by Allianz Insurance, a major name in the insurance sector. If you make a claim, you’ll pay an excess of £50 per item.

If you’re not interested in covering all your gadgets, Protect Your Bubble will cover your 32GB iPhone 5, for example, for £5.99 a month – or £6.99 if you want to add loss protection.

The claims excess ranges from £25 to £75, depending on the item. The excess on an iPhone is £50. Protect Your Bubble is underwritten by Assurant General Insurance Limited.

Through your bank

Some current accounts, such as the Nationwide FlexPlus account and the NatWest Select Silver Account, come with mobile phone insurance included.

Both accounts charge £10 a month, which isn’t far off what you’d pay for network or third party mobile phone insurance. You’ll also get travel insurance with both of them and breakdown cover with Nationwide.

Nationwide’s MPI will cover up to an original retail value of £1,000 and up to £2,000 of unauthorised calls. Your family’s phones will also get cover too. The excess ranges from £25 to £100.

Don’t assume that just because your current account offers mobile phone insurance that you’re automatically covered, though, as most accounts stipulate that you must register your phone with them to qualify for the cover.

So, you need to check if your bank provides MPI and, if it does, to make sure your phone is registered.

However, don’t choose a current account just to get mobile cover, as there are far more important things to consider. Clare Francis explains how to choose a current account here.

Home insurance

Before you go buying additional cover for your phone, check your home insurance policy doesn’t already cover it.

As standard, most policies will only cover you against theft from your property – but more comprehensive policies with accidental damage and personal possessions cover may pay out if you accidentally drop and smash your phone, dunk it in water or lose it/have it stolen while away from your home.

The downside is that the excess on home insurance policies can be the most expensive of the four options, and making a claim for your phone’s cracked screen will forfeit your no claims discount and probably push up next year’s premiums.

Depending on the value of your phone, it may be cheaper to just pay for a new one and preserve your no claims discount.

Other things to watch out for

You shouldn’t buy mobile phone insurance based on price alone. A policy might look cheap, but it’s a false economy if you’re not getting the cover you need.

If you’re relying on your home insurance policy to cover your phone, check the policy wording carefully to see what you’re covered for and pay particular attention to any exclusions.

Check whether you’ll get a new phone, a cheque or a repair when you make a claim – because this will dictate how long you’ll be sans-mobile after making a claim.

Some third party insurers will ask you to pay the full premium before you can make a claim, so if you’re paying in monthly instalments, you’ll have a bill for this and the excess.

Check whether there’s a maximum number of claims you can make a year, which is particularly important if you’re clumsy like me.

Finally, you may not be covered:

  • For the first two or three weeks of the policy
  • If you fail to show ‘reasonable care’ of your phone, or
  • If you damage your phone while trying to modify it yourself in some way.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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