When you buy a phone directly from a shop or network provider you may find that the salesperson does their best to sell you mobile insurance at the same time. But it can cost around the same to replace your handset as it does to pay for and make a claim on your insurance.
Alternatively, you may also find that it is cheaper to insure your phone as part of your home contents policy or even as part of an added value bank account.
This tut is to help you decide which insurance is best for you, and if you need it at all.
Cost of insurance vs cost replacing your phone
The first decision you need to make is whether or not you need insurance for your mobile at all.
A small monthly premium may seem good value compared to the full price of replacing a handset, but once you've factored in the excess, and the fact that networks have been known to cut deals to keep customers if they lose a phone, it could be cheaper to go without cover.
Most mobile phone insurance policies have an excess - ?25 to ?30 is typical - that must be paid before the insurance pay out. If you've got a handset and a PAYG contract you only stand to lose the value of the phone if it is lost or stolen.
In these cases, it would need to be a pretty flash and expensive phone to make the insurance worth it.
If you are on a contract you have to work out if the cost of your insurance will be cheaper than forking out for a new contract. This gets complicated when you take pay monthly contracts in to consideration.
If your phone is lost, stolen or damaged then you will still be liable for the remainder of your contract. In this situation you will be sent a new Sim card for the contract and you do have the option of getting your hands on another handset to put it in.
Sometimes it may be cheaper to buy out your contract and get a new phone that way ? effectively starting from scratch. Where customers are approaching the end of their contract, networks have been known to offer the option of starting a new contract with either no penalty or a reduced fee for paying off the original contract.
However, it has become more complicated as networks have offered more complex and expensive phones. New generation handsets such as the iPhone or Palm Pre will also require a one-off payment for the phone as well as regualr contract payments.
It depends on the cost of your handset and length of contract left when you lose it whether getting insurance is good value for money.
Of course you can't predict when you will need to replace your phone so if you decide that insurance is the best option,here are some of the pros and cons of getting mobile phone insurance.
Phone provider insurance
Don't be pushed into buying mobile phone insurance from a phone provider because the sales person says you need it. You can always go back and buy the insurance if you decide it is good for you but it is best to shop around first.
Your provider may offer you a special rate if you are an existing customer but it is worth researching to see if it may be cheaper to insure your phone under your home contents insurance or as part of an added value bank account.
With all insurance policies you should check it carefully to ensure you are covered for accidental damage, theft and loss.
Home contents insurance
Most home insurance policies will often cover you if your phone is damaged by fire, flood or leaking water. It would also be covered if it was stolen as part of a burglary. But your phone may not be covered if it is damaged or lost outside the home - it depends on the terms and conditions.
However, some providers will offer you additional personal belongings cover - which means that you and your family's personal effects are covered outside the home and anywhere in the world. This also means that you don't have to take out extra baggage insurance if you go on holiday.
'When getting insurance for your phone you should make sure it will be covered for accidental damage, loss, theft or it was to break outside of the manufacturer's warranty.'
You should check your household contents insurance to see if they are already covered for loss, theft or damage to your mobile. If not you should investigate how much it would cost to add accidental damage or personal belongings coverage to your policy.
If you upgrade or change your phone you should also remember to inform your insurer of this.
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