Don’t take out mobile phone insurance (and why) – Money Tip #160

 There are a number of financial products I loathe and mobile phone insurance is one such product.

From personal experience, scrutinising the terms and conditions as well as anecdotal tales of non payment on the behalf of the insurers mobile phone insurance is a poor deal for the consumer. I don't want to use the word 'con' but the insurance companies make it difficult for me not to especially as these products are huge money spinners for the providers.

Mobile phone insurance is expensive and typically contains high excess levels. Which?, the consumer magazine, recently carried out a study on mobile phone insurance and found that:

• monthly premiums from network providers for iPhone (the iPhone 4S model) insurance ranged from £12 a month (Orange) to £15 a month (O2).
• all providers also charged an excess of at least £50 before it paid out on any claim.

Mobile phone insurance policies are notorious for their exclusions which make successful claims almost impossible. In the same study Which? claim that one respondent said 'his claim was refused after his phone was stolen because the bag it was in was next to his feet in a pub, rather than actually in his hand'.

Beware of specialist gadget insurers

There are specialist gadget insurers which cover multiple gadgets, including mobile phones, under their policies for a slightly lower premium. But again payouts are notoriously difficult with some insisting that the remaining annual fee on the policy is paid before they accept a claim.

Use your home insurance instead

It is possible to have a handset covered as part of your home contents insurance if it is damaged or stolen within your home. In addition, some home insurers will even cover your mobile outside of your home but check your policy details.

One point to bear in mind is that home insurance will not cover you for the cost of calls made after your phone is stolen, unlike some mobile phone insurance policies. But let's be honest, most people will notice their phone has gone within a nanosecond of it leaving their ear, so would contact their operator to block the phone anyway.