Why you don't need mobile phone insurance!

You might not be able to live without your mobile, but does that actually mean you need mobile phone insurance? Donna Ferguson investigates.

Nowadays, most of us see our mobile phones as a necessity, not a luxury. If you’re one of those people who can’t live without your phone, then insuring your mobile phone against loss, theft or damage with your network provider probably seems like a good idea.

But it’s not. At least, not always.

The fact is, not everyone needs mobile phone insurance. And even if you do need it, you may find you are already covered under an existing policy.

Here’s how to figure out where you stand.

Are you on a contract?

Pay-as-you-go users are less likely to need mobile phone insurance than contract customers. This is because, if you’re on a contract, you’re committed to paying a set amount for your calls each month, regardless of whether you have a handset to make them on. Pay-as-you-go customers who lose their mobiles and need a new phone could potentially sign up to a contract and get a free phone that way, without needing to make a claim on their insurance. Either that, or buy a cheap second-hand version of your old phone on eBay.

Of course, if you have a very expensive handset such as a smart-phone, you may decide you need insurance regardless of your call plan, as the cost of replacing these phones is so high.

But first, check whether you are already covered under your home insurance policy.

Are you already covered?

If you have home contents insurance, you should be covered for theft or loss of items in the home. That includes your mobile phone, as long as the theft, loss or damage occurs in your home. So if you lose your phone or it is stolen while you are outside your home, you can’t make a claim. Furthermore, if you haven’t got accidental damage cover, you won’t be covered for accidental damage to your phone such as water spillage.

John Fitzsimons looks at three simple ways to cut the money you spend on your mobile each month

The good news is, accidental damage cover is often automatically included in contents policies, potentially along with an additional benefit known as personal possessions cover. Check with your insurer - if you don’t have this cover, you can probably add it to your existing policy at very little cost. It’s worth it, because if you have personal possessions cover, your phone (and other items, such as your keys or bags) will be insured outside the home.

So far, so good... but be aware that you will have to pay your normal excess on the policy when you make a claim. You may also find it a time-consuming process as home insurance companies are notoriously slower at replacing phones than mobile phone networks (which typically promise to deliver a new phone to you within 48 hours).

Just bear in mind that, after paying the excess, you may find you are claiming for a relatively small amount (compared to, say, a claim for a fire or burglary) – and by making this claim, your premiums are likely to be higher next year. If you have already made one or two claims on your home contents policy in the last three years, it may end up costing you considerably more than you save think to make another claim. Read The secret rule that could cost you hundreds to find out why.

What about your current account?

Many packaged current accounts – namely, current accounts that charge a monthly fee - include mobile phone cover as one of the benefits of the account.

Here’s a list of the current accounts that include this benefit, and how much they charge each month:

Bank	Current account(s)	Monthly cost
Bank of Scotland	Ultimate Reward Account	£12.50
Barclays Bank	Additions Active Current Account Plus Graduate Additions Premier Life Bank Account	£15 £5 £7 £17.50
Citibank	Citigold	£25
First direct	1st Account with First Directory	£6 for the first three months, then £12
Halifax	Ultimate Reward Account	£12.50
Lloyds TSB	Gold accounts Platinum accounts Premier accounts Silver accounts	£12 £17 £25 £7.95
NatWest	Advantage Gold Black Account Select Silver Account	£12.95 £24 £8
RBS	Black Account Royalties Gold Select Silver Account	£24 £12.95 £8
Santander	Premium Current Account	£20
Smile	Smilemore	£13
The Co-operative Bank	Bank Privilege Bank Privilege Premier	£9.50 £13
Ulster Bank	uFirst Current Account uFirst Gold Current Account uFirst Private Account	£9 £13 £25

Source: Moneyfacts

As you can see, the cheapest packaged current account that includes mobile phone insurance is Barclays' Current Account Plus, which charges just £5 a month for loss, theft and accidental damage cover of a mobile phone (rising to £6.50 a month in October 2011). However, this is the main benefit of the account – there is no travel insurance benefit included as there is on most packaged accounts.

Finally, be aware that the level of cover you receive may not be what you would have chosen for yourself, or there may be a high excess to pay in the event of a claim. The Lloyds TSB Silver Account, for example, offers excellent mobile phone cover (among other benefits) for its monthly fee of £7.95 a month – but you have to pay the first £100 of any claim for an iPhone and the first £50 for all other handsets. Considering you pay £95.40 over the year for the policy, that means a bog-standard phone would have to be worth £145.40 before you’d get your money back in the event of a claim. You might be better off sticking £100 in a savings account for such emergencies instead!

Of course, most decent packaged current accounts do offer other benefits as well as mobile phone insurance. But these may not be relevant to you - for example, car breakdown cover if you don't drive, or travel insurance if you don't travel - so aren't worth paying for. The insurance policies can also be tricky and difficult to claim on. So make sure you read the small print before you go down this route.

A specific policy for mobile phones

If, even after all this, you’ve decided you do need mobile phone insurance, and you’d rather not lump it in with your current account or your home insurance policy, then I’m guessing your next question is: what is a competitive price to pay for a policy from a mobile phone network?

Read onto part two to find out the answer to this question!

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