Mobile phone insurance: The next mis-selling scandal?
Besides cover for theft, many policies offer to insure you against accidental loss. But how useful is your insurance if you lose your phone?
Not very, as Jonathan Mathias, 30, found out. For years, Jonathan, from north London, dutifully paid O2 £10 a month to insure his iPhone for theft, damage and loss. So when, on a recent holiday in Spain, he left his phone in a taxi, he assumed he would be covered.
Sadly, that turned out not to be the case. Because Jonathan had lost his phone in a public place, O2 said he wasn't covered.
It turned out when Jonathan took a closer look at the terms and conditions of his phone insurance, he wasn't covered if his phone was "left unattended in a known location".
It's a ludicrous clause and begs the question, how can you lose your phone unless you leave it unattended in a public place? Would O2 pay out if he had lost his phone down the back of the sofa at home?
Sadly, O2 isn't the only firm to have ridiculous clauses surrounding claims for accidental loss. When Moneywise investigated, we could not find a single specialist gadget insurer or mobile phone company whose insurance doesn't include a clause stating that lost phones will not be covered if the phone is "left unattended" and/or lost in a "public place".
So, in what scenario can you claim for a lost phone?
Most of the phone insurance providers Moneywise contacted refused to outline a scenario where a claim would be successful. "Each claim is assessed on a case-by-case basis," said a spokesperson for Orange Care.
The notable exception is protectyourbubble.com. It "expects customers to take reasonable precautions in safeguarding their mobile phone".
Mike Reid, UK director for the company, says: "A customer who deliberately leaves their phone unattended won't be able to claim for accidental loss or theft."
In practice, this means if you deliberately leave your mobile phone unattended while you pop to the loo or the bar then you aren't covered, but if you "accidentally leave your phone on a train, in a taxi or realise there is a hole in your bag and your phone is missing, you’d be covered".
With so many caveats to stop you claiming, is it fair to say that some mobile phone insurance policies are being mis-sold?
Possibly, is the response from the Financial Services Authority. "For mobile phone insurance sales, the issue of whether or not an insurance contract has been mis-sold often comes down to whether exclusions were made clear at the point of sale," says Toby Parker, spokesperson for the regulator.
Did your insurer make a point of telling you that the accidental loss insurance you were buying was nigh on impossible to claim on?
"If customers believe they have been mis-sold or have not had their claim handled fairly, they should consider complaining to the relevant firm in the first instance," says Parker. And if that doesn't work, you should take your case to the Financial Ombudsman Service.
Is it worth insuring your mobile phone?
If you have sufficient savings and could afford to replace your phone without it damaging your future financial plans then mobile phone insurance is entirely unnecessary. But if you don't have a spare £400 to spend on a new iPhone, insuring your phone can be invaluable.
If you need mobile phone insurance, don't buy it from your network provider. These policies are the worst in terms of expense and hidden small print.
A better option may be a standalone gadget policy such as the ones on offer from protectyourbubble.om. But these are also expensive, costing between £5 and £10 a month.
A cheaper, more reliable option is to add your mobile phone to your contents insurance. "As with all insurance it's important to check that the cover you’re buying is the cover you need, but it's worth finding out what cover might be available from an existing home contents policy before taking out a new standalone policy," says Jeremy Cryer, head of emerging products at GoCompare.com.
Most home contents insurance policies will cover your phone if it is stolen away from the home but check with your policy provider whether it also covers you for accidental loss.
For example, LV= offers contents insurance customers a personal possessions add-on covering "items that are designed to be worn or carried, such as a mobile phone", says Vanessa Chance, spokesperson for LV=. "If your phone was lost or stolen while away from the home, you could claim on your insurance for a replacement."
These policies are usually a lot cheaper than standalone insurance – adding a couple of pounds a month to your premiums – and contents insurance providers are far clearer about their exclusions.
Whichever company you buy insurance from, make sure you know exactly what you can and can't claim for before you sign up and hand over any cash. And if you already have phone insurance, check your small print and if there are exclusions that were not made clear to you when you purchased the policy, complain.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.