Five insurance rip-offs to steer well clear of

1: Standalone mobile phone insurance

Losing your phone is annoying and can cost a lot of money to replace. To safeguard against this many people buy mobile phone insurance at a typical cost of around £7 a month. But this tends to pay out only if your phone is stolen or damaged.

Many policies are also riddled with exclusions, and often have an excess attached to them (typically between £10 and £30). A new iPhone 4 will set you back £500, so the excess in that case is only a small fraction of the cost of the handset.

However, if you have a standard phone, typically costing under £50 to replace, it is not worth paying for insurance: seven months' premium would cover the cost of a new one anyway.

Instead consider adding an 'all risks' option to your home contents insurance. This costs around £30 a year and will cover your valuables, including mobile phones, away from home.

Beware mobile phone insurance scams

2: ID theft cover

This type of insurance, costing between £5 and £7 a month, promises to cover you if your identity is stolen; but you already have the same amount of protection under the Banking Code. This stipulates that if the identity theft is not your fault, you'll get the money back from your provider.

ID theft cover often also offers you access to your credit report, but this is available through a credit reference agency such as Experian for just £2.

Have you been mis-sold ID theft insurance

3: Payment protection insurance

The banks have been slammed for mis-selling PPI policies and many are now set to pay compensation to customers - a clear warning sign that this product might not be worth having.

While PPI sounds good in principle - it's sold alongside mortgages, credit cards and loans to cover repayments if you're unable to work because of accident or illness - it's expensive and comes with a lot of exclusions. Its big sister, income protection insurance, offers much more comprehensive cover and can be cheaper.

How to reclaim your PPI premiums

4: Travel insurance at the point of sale

Once you've booked flights, most airlines will try to sell you travel insurance. However, in most cases this will be cost more than it will be elsewhere, and the amount of cover, in particular the value of medical protection, won't be sufficient.

Instead use comparison sites to find cheaper, more comprehensive cover.

Read: 10 tips when buying travel insurance

5: Buildings insurance from mortgage providers

When you apply for a mortgage, the provider will most likely try to sell you buildings insurance. This covers the structure of your home and is compulsory for all homeowners.

But go through an insurance provider instead to ensure you get cover that suits your needs at the right price.

Your Comments

unfortunately we live on a flood area and there is only one insurer who offers Home Insurance cover for flood damage.
We moved 7 years ago from a flat to a bungalow and at the time of the move we just added buildings cover to the contents policy that we had with our existing provider.  When a year later it we tried to renew, cover was declined because we were honest and told the insurer that we'd found out (after we moved in) that the bungalow had been affected by a flood (10 years ago).  There had been no major damage - just carpets had to be replaced.  We then found out who most of our neighbours were with and went with them.  They told us that our postcode would have identified that we lived in a flood area - most of our borough is only a few inches above 'sea level' and the name of our road is also a big clue 'Riverside' although there are houses between us and the River

What if we could find an effective and reliable Protection for the Smartphone.
Imagine if we could realistically, stop worrying about dropping the cell phone by accident.
And get rid of accidental damages.
And be able to keep the cell phone always handy and ready to use at all times.
And never forget the cell phone again.
A Solution by a reputable Company, that would make the limitations from insurance companies totally irrelevant.
By drastically reducing the number of thefts, accidental damages and lost phones.
That, would mean that we could be less dependent upon insurance policies.