35 million mobile phones are not insured
Consumers are running the risk of forking out millions of pounds on lost handsets and fraudulent phone usage by not insuring their mobiles, according to independent price comparison and switching service, uSwitch.com. 35 million mobile phones are not insured, and of those that are, just a third (35%) are protected against fraudulent calls. Equally as worrying, the survey shows thatover a third (39%) of consumers that have insured their phone don't actually know what their phone insurance covers.The research comes as a report from the British Transport Police shows a 22% rise in the number of muggings for mobile phones.
Insurance may be a useful safety net, but losing a phone can still be an expensive business if consumers haven't read the small print of their policy. Aside from the cost of a new handset, one of the biggest expenses consumers face if their phone is lost or stolen is fraudulent activity. Worryingly there seems to be a distinct lack of safeguarding against fraud from both consumers and the networks that provide the insurance. Just a third (35%) of consumers believe that they are covered for fraudulent calls and this falls to 30% for protection against data usage.This means that, if a phone thief makes a two hour overseas call before the stolen mobile has been reported and blocked, many consumers would be liable for an instant £180 hit on their bill.
The uSwitch.com study reveals that, despite being twice as expensive as independent phone insurers, just two of the major mobile networks, T-Mobile and Vodafone, offer fraud protection as part of their policy. O2, Orange, Three and Virgin Media neglect to cover fraud in their policies, although in most cases consumers won't be liable for any charges incurred once their phone has been reported missing and blocked.Despite this, nearly a quarter (23%) of consumers with insurance are covered by their network.
The majority (54%) of the 13 million insured mobile phones are covered as an inclusive extra to consumers' bank accounts. Impressively, all major packaged account insurance policies protected against fraudulent phone use. One quarter (23%) of mobiles are insured by the networks and one in eight (13%) are covered through a home insurance policy. Third party insurers, while offering some of the most competitive deals, cover just 1 in 10 phones.
Packaged bank accounts- The most popular choice by consumers, these generally provide the most comprehensive cover. However, while many consumers think of mobile insurance as a free add-on, most will pay a monthly fee for their bank account so need to check that they are getting good value. Only certain packaged bank accounts protect the phone outside of the home - some required additional personal possessions cover - so research is essential.
Networks - Despite being almost twice the price of other insurers on the market, 23% of consumers fall for the convenience of insuring their phone through their network when they sign up to a new deal. But just two networks, T-Mobile and Vodafone offer their smartphone customers up to £1,000 protection from fraudulent usage.
Third-party/independent insurers- Taking insurance through an independent retailer can be far cheaper than going through your network, but consumers should look out for the excess charges, especially for lost or stolen handsets. Plus, some policies only cover up to £100 of fraudulent calls. But for those fairly confident they won't lose their phone, the smaller monthly payments could be the best way to get a cheap security blanket.
Home Insurance - It is worth making sure you read the small print as most home insurers require extra personal item cover to protect your mobile phone outside of the home, averaging an extra cost of £67 on top of the normal annual premium. Consumers also need to look out for high excess fees, averaging at £100 per claim.
Ernest Doku, technology expert at uSwitch.com, comments: "Unfortunately, smartphones are getting increasingly popular among muggers as they can be easily sold abroad for hundreds of pounds. People need to wise up to the risks open to them if they do not insure their phone. Handsets very expensive to replace, but the real sting in the tail is the astronomical phone bill you could receive if a thief uses your phone before you have had a chance to block it.
"The cost to insure your phone is based on its age and value, as well as the level of cover you select. iPhones cost an average of £11 a month to insure with Blackberries coming in at £7 on average. Low premiums may not necessarily mean you're getting the best value insurance, so make sure you know what you are getting for your money."