Nobody wants to pay for things they don’t need. This applies to financial products just as much as home, technology and kitchen gadgets.
Everyday this week, we’ll be analysing the products which we believe offer bad value for consumers, starting today with mobile phone insurance, and outlining why we’ve launched a new campaign to ensure that consumers are protected from poor products in the future.
Mobile phone insurance isn’t the best option
Which? research has found that almost nine million people have lost at least one phone in the past five years. For those with a valuable handset (the top-end iPhone 4S costs £699, for example) it’s a good idea to get it covered.
We don’t think taking out an individual mobile phone insurance policy is usually your best option, as the insurance sold by mobile providers and retailers is expensive.
We 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). In addition, all providers we investigated charged an excess of at least £50 before it paid out on any claim.
While one benefit of most mobile phone insurance is that it will cover you for the cost of any calls made on your stolen phone, and most home insurance won’t cover this, you can minimise this problem if you report your phone missing straight away.
Look out for mobile insurance exclusions
Many policies also contain frustrating exclusions. One Which? member told us that 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.
Specialist gadget insurers tend to offer slightly lower monthly premiums and generally sell policies that will cover several tech items. But, if your phone is damaged or stolen, you may have to pay the remainder of the total annual fee before your claim is accepted.
Phone insurance is often sold by sales staff working in a pressurised, high-speed sales environment, potentially on commission. We don’t think this is a good way to buy a relatively complex insurance product, or to fully understand any exclusions, terms and conditions.
The Which? verdict on mobile insurance
You’ll generally be better off insuring a valuable phone as part of your home contents insurance policy. The personal possessions element of this (an optional add-on to most policies that typically costs £40-£50 a year) covers your belongings outside the home.
Check your policy includes mobile phones, covers accidental and water damage and that limits on the value of individual items cover your phone’s full cost. Some policies also require you to register your handset in advance of any claim.
Watchdog not lapdog campaign
We believe that the financial regulator should be responsible for putting a stop to poor-quality financial products, which is why we’re launching our new .
At the start of next year, the current regulator, the Financial Services Authority (FSA), will split into two new authorities:
- The Financial Conduct Authority (FCA), which will have responsibility for protecting consumers
- The Prudential Regulation Authority (PRA), which will focus on maintaining financial stability
We want to ensure that the FCA puts consumer protection at the heart of everything it does – and make sure it becomes a watchdog that keeps the financial services industry in check, not a lapdog that panders to it.
- The Which? Money Helpline – we’ll help if you have any queries about financial products and services
- – we explain what our new campaign is trying to achieve
- – sign up to the Watchdog not Lapdog campaign to call for greater consumer protection