Do you need mobile insurance?
Unlike most insurance types, mobile phone policies usually don’t depend on age, sex, work, income or any other standard demographics. More importantly, most also fail to take claims history into account, though a few do have tokenistic no-claims promotions such as a free battery after two years.
This means it’s a one-price fits all solution, and as we’re all tarred with the same brush: Those people who never lose or damage their phones subsidise the costs for serial phone losers.
This simple fact dictates whether it’s worth getting a policy or not.
You know you better than the insurers do
The most important question to ask yourself is am I a loser? What’s the realistic risk that you’ll damage or lose your phone? By being aware of this, you can play the system and win. If you’ve a ten year ‘no problems’ streak, or keep your handset rigidly clipped to your belt buckle, paying a whack for robust insurance is likely to be a waste.
Personally, while I’m good with money, I’m scatterbrained with keys and phones and have had more than ten phones lost, broken or nicked in the last eight years. As I know I’m a loser, insurance is a good bet for me, as it costs less than repeatedly paying for a new phone.
Picking the right solution…
This depends on the cost and type of deal you’ve got…
- Are you a Pay-As-You-Go user?With PAYG phones the downside risk is limited, as once your credit has been used no more fradulent calls can be made and you’ll simply need to buy a new handset. Thus unless it’s a super-flash loadsamoney job, insurance is probably overkill.
- Are you a mobile phone loser?If you’ve got a contract mobile phone, and are quite likely to lose or damage it, then insurance is usually worth it. As even if you didn’t want to replace the phone you’d still need to pay the monthly fee until the contract ends if you lost it.
- Is your mobile usually in safe hands?If you’re a contract mobile phone user who is unlikely to lose or damage your mobile, then paying for comprehensive cover is probably overkill. After all, even if you do lose your phone once, the cost of replacing it’s probably less than a few years’ insurance. Even so, there are some ways to off-set the risk.
Self Insurance; save up for a rainy day…
Self insuring simply means rather than paying for an insurance policy, you put the money aside each month into a high interest savings account. This way if you lose the phone you’ve got cash to pay towards a replacement, and if you don’t, the cash and the interest are yours rather than the insurance company’s.
The risks are that you may lose the phone early on before you’ve saved up enough cash, and that fraudulent calls made on your stolen phone before it’s barred aren’t covered.
If you do decide to self insure, always establish the replacement costs to see how much you need to save up.
- PAYG replacement costs.If you’ve got a Pay-As-You-Go phone, it’s simply a case of finding a cheap new deal.
- Orange contract customers replacement costs.Orange typically charges £70 ‘emergency insurance’ for standard phones and £170 for smartphones. This’ll get you a new handset, but you must take out 6 months Orange Care insurance with it, at £6/month.
- Other contract customers’ replacement costs.Other networks generally don’t offer emergency insurance so it’s necessary to buy a new phone at an unsubsidised price, and with the ever-growing costs of some high tech phones this could be hefty; more than £400. However if you’re on another network a quick call to check your own deal is always worthwhile, though don’t expect too much.
If replacing the phone is too expensive.
Don’t just plump for a policy; there are other routes to keep the replacement cost down:
- Get a new contract.If you’ve not long left of your contract, it can be cheaper to simply get a new deal and downgrade to the cheapest tariff for the remainder of your old contract. E.g. three months on an unused £20/month contract is cheaper than spending £400 to replace the phone. Providers are getting stricter on downgrading tariffs but most will look on a case-bycase basis so it’s worth a try.
- Don’t replace the exact model.If you don’t have the mobile’s SIM , then ask your network for the cost of replacing just that (it’s usually free), not the phone. Then you can pick up either a Pay As You Go deal (£10 for these is no longer uncommon) or buy one off eBay. However do ensure it’s either on the same network or it can be unlocked.
- Get an insurance policy.If the cost of replacing a mobile, and especially fraudulent calls would be a too big a risk for your pocket, then it’s back to considering insurance, whether utilising home contents policies or the cheapest independent providers.
Use your Home Contents Insurance cover
It’s possible to add an ‘all risks’ option to existing home contents insurance, which usually covers valuables taken outside the home against loss, theft or accidental damage, for anything from around £25 up a year. This has the added benefit that it’s not just your mobile phone that’s covered.
If you’re going to add this, then it’s also worth investigating whether you can save on the whole policy at the same time.
Check the details of the cover
It’s important to check what the exact cover is before laying down your cash.
- Will they replace the phone? If so, how long will it take? It’s likely to take longer than your network would.
- Will they give you cash? In which case, will it be the market rate for your specific phone, new for old, or the cost of network replacement?
- Will you need to pay an excess on the reclaim? The networks will usually make you pay an excess of £15 or £25; some independent insurers can charge a fair bit more.
- Will fraudulent calls be covered? This is unlikely but possible. If not, you may may want to self-insure against that eventuality, or at least see the protect yourself against fraud section to minimise the risk.
- www.moneysavingexpert.com -
(To be continued)