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MSE’s Academy of Money
MSE’s Academy of Money

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11 Mobile phones and insurance

There’s a huge market for phone contracts and with these comes the question of whether you need phone insurance.

So, using the four-step approach, you can now consider whether it makes sense to insure your phone.

The figure is a photo showing three young people using their mobile phones.
Figure 8 How did we manage without mobile phones?

Buying insurance for a phone is not cheap. The cost typically varies from £5 to £15 per month.

So, when assessing whether you need to insure your phone, think about these questions:

  • What exactly are you getting cover for?
  • Does the cover you get justify the cost?

Cover will include your phone being lost, stolen or broken. It might also include cover for unauthorised calls, accidents and phone accessories such as linked headphones/earphones if stolen along with the phone.

But policies will exclude several situations where you will not be covered. These are called ‘exclusions to the cover’. They could include damage resulting from carelessness, theft of the phone when it was left unattended or water damage. Exclusions might also apply if there’s delay in reporting your phone lost or stolen.

So, before you ‘decide’ and ‘act’ on this question of whether to insure, make sure you check what’s in the cover and what’s not.

One thing to note is that the cost of mobile phone insurance, unlike most other forms of insurance, is not risk-based. The cost does not reflect your characteristics or record of claims. This is something else to bear in mind when deciding whether you need to insure your phone.

Activity 11 Should you buy phone insurance cover?

Timing: Allow approximately 5 minutes for this activity

What should you think about when deciding whether to sign up for cover?

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First, check whether you already have protection through a home contents insurance policy for the family home. If you have a bank account, check there too. Some banks and building societies offer phone insurance to their customers with a paid-for bank account.

Next, if neither of those solutions covers your phone, run through these statements to see if any apply to you:

  • You have a history of lost or broken phones.
  • You are very reliant on the phone – and would need to be able to replace it quickly (in this case make sure the insurance contract offers speedy replacement).
  • You have a very expensive smartphone.
  • You could not afford to replace the phone yourself.

Are you any closer to deciding whether or not to take out insurance cover? The greater the number of statements that apply to you, the more insurance cover would make sense.

Given that the cost of phone insurance is not risk-based, you do need to consider closely your own record when it comes to mishaps with your phone. If you are a regular loser of your phone or prone to mishaps causing it to damage, buying insurance is likely to make good financial sense. If, by contrast, you never lose or damage your phone, insurance is likely to be a waste of money.