Tuesday 2 August 2011

Be smart when it comes to insuring your smartphone

One in three people now take out insurance for iPhones and Blackberries. But is it worth it?


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Most of us cannot live without a mobile phone – figures show nine out of 10 adults own a handset. But high-priced insurance, confusing data roaming charges and the rise of 24-month contracts can leave many customers paying more than they bargained for – easily adding hundreds of pounds to your annual bill.
And with a lack of consumer protection if your device falls into the wrong hands, the customer will be forced to foot the bill – proving an expensive lesson.
With the latest iPhone or Blackberry the phone of choice today, there has been a marked rise in those taking out insurance. In 2006, just 3pc of users insured their handset, but by 2011 32pc had taken out a policy in the past 12 months – a number which is likely to rise as mobile handsets increase in capability and price.
Unfortunately, finding the best answer is not as simple as going to a price comparison site and typing in your needs. Here we examine the options.

Insurance from your mobile company

All major mobile networks and high street retailers encourage consumers to take out insurance for their new handset at the point of sale, with some major networks charging up to £15 per month – or £180 a year – to insure the latest smartphones. Yet despite the high cost, figures from sim-only operator GiffGaff show that almost 80pc of policyholders have never made a claim.
James Atkinson, editor of Mobile Magazine, said: "There is a lot of emotion involved when buying the latest mobile or gadget, so people's judgment can sometimes be a little clouded at the point of purchase."
When looking at whether this insurance is suitable, price is often the first consideration. For example, it costs £15 a month to insure an iPhone 4 16GB with O2, and you would still have to pay a £75 excess if the phone needed replacing. This would rise to £100 if you were unlucky enough to need it replacing twice. So a year's worth of premiums, plus one replacement phone would cost you £255 – half the cost of a new handset.
But making sure you are properly insured is not straightforward. For instance, while this type of policy is likely to be costly, it can be riddled with exclusions. For example, it may not cover you for any calls made when your equipment is lost or stolen.
You must also make sure you comply with the insurer's conditions, otherwise the policy will not pay out – for instance, if your phone is stolen you must bar it and contact the police for a crime reference number.
Also bear in mind that if you opt for a mobile phone contract and insurance through an intermediary such as Phones4U or Carphone Warehouse, it is crucial that when you renew your contract with the mobile phone provider and take out new cover, you cancel the original insurance. If not, you run the risk of unwittingly paying for insurance for several years and often, for a mobile phone that you no longer own.

Home insurance

If you have home contents insurance, it is possible that your mobile phone is covered so check with your insurer. If you are not covered it may be possible to ensure that you are by paying an extra premium, typically around £23-£35, and opting for personal possessions cover. This will apply to items lost, damaged or stolen outside the home.
However, it is worth bearing in mind that your excess may be quite high, perhaps even more than the cost of the handset itself, so such a provision within your home contents insurance may not be suited to claims for mobile phones. Your home insurance cover may appear to be the cheaper option in the short term, but Peter Harrison from Moneysupermarket.com pointed out that making a claim may end up costing you more than the cost of the replacement handset as insurers hike your future premiums.
"Unlike a stand-alone mobile phone policy, with home insurance there is a no-claims discount (NCD) to forfeit and this can increase premiums when your cover is up for renewal," he said.
Mr Harrison added that it is a common misconception that it is the size of the claim that affects a NCD when, in reality, it is the number of claims that insurers consider when calculating premiums.

Packaged accounts

Millions of UK mobile users could be unknowingly paying twice to insure their handsets, as their devices may already be covered through a packaged bank account.
According to figures from Defaqto, 74pc of these types of bank account include mobile phone insurance, but the policies and level of cover may vary.
Before you make a choice on a new policy, it is always worth checking the star rating from Defaqto (www.defaqto.com), which analyses the quality of financial products to help you find one that best suits your needs.
For example, if you are looking for a basic level of insurance cover, you may want to consider a product with one or two stars. If, however, you are looking for a higher level of features included within your cover opt for something more comprehensive and with a higher star rating.
Keep in mind that it is possible to get affordable insurance without compromising on the quality of the cover.
For instance, both Halifax Reward Current Account and Barclays Current Account Plus offer five-star cover, which includes protection against loss, damage and theft on handsets – but prices vary.
The Halifax account will cost you £12.50 a month, compared with the above account at Barclays which only charges £5.
When it comes to a packaged account, mobile phone insurance is often one of the most valuable benefits, but read the small print carefully. Always double check the terms and conditions to make sure you are paying for cover that will protect you for the full price of your handset. With smart phones costing hundreds of pounds, you wouldn't want to come up short.

Stand-alone policies

The most competitive option is typically a stand-alone policy. Not only are premiums cheaper, but you can check that the policy offers exactly what you want.
For instance, Protect Your Bubble (www.protectyourbubble.com) offers annual cover for an iPhone 4 32GB for just £5.99 a month.
This offers worldwide cover for theft and breakdown, as well as accidental and liquid damage. However, if you lose your phone, it will not be replaced unless you have selected this as an add-on for an extra £1 a month.
Bear in mind that if the mobile phone cannot be replaced with an identical make and model of the same age and condition, the insurer will replace it with one of comparable specification or the equivalent value taking into account the age and condition of the original electronic equipment. This is fairly standard among stand-alone insurers, and for some mobile owners, the cheaper premiums may be worth it.
An added benefit is that with this type of policy, you can also add additional handsets and earn an 10pc multiple item discount. By The Telegraph

   


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