General Insurance Article - Is mobile phone insurance worth it

This Christmas, thousands of people are expected to give or receive new mobile phones with the latest models costing up to £1,500. Defaqto weighs up whether mobile phone insurance or home insurance is better value.

 Mobile phone insurance is designed specifically for mobile phones and is usually sold by the mobile phone networks alongside the mobile phone contract. It is designed to cover the handset in case of loss or damage, as well as the cost of any calls and data if a phone is stolen. Mobile phone policies tend to offer the most comprehensive insurance for phones but you may already have this cover within your home insurance policy.

 If a phone is stolen from your home

 If your phone is stolen from your home, then your home contents insurance policy will most likely cover the cost of replacing your phone (99% of policies include this as standard) however, it won’t cover the cost of any calls or data. If you block your phone immediately with the network, this cost should be minimal, but until it is blocked, you are liable for these costs which can run to hundreds of pounds in a short space of time.

 If a phone is stolen while out and about

 Most mobile phone thefts occur away from the home and so it is worth considering what cover you have in place for your phone. Generally, home contents insurance policies will not cover your phone while you are not at home unless you have bought the additional ‘personal possessions’ add-on and only 18% include this as standard. However, the majority (83%) of mobile phone insurance policies would cover theft regardless of where it took place providing you had taken reasonable care of the phone.

 Personal Possessions insurance can be good value as it not only covers your mobile phone but all possessions that are designed to be worn or carried. For example, most policies offer around £2,300 worth of cover and if your bag was stolen while out and about, it would cover the cost of your bag, phone, cash and other items in your bag; which may be more appropriate for you. However, it may not cover the cost of calls or data.

 Unauthorised calls

 If your phone is stolen, it’s not just the cost of the handset you have to worry about but the thief can run up hundreds of pounds worth of calls and data downloads before you are able to block the phone. Almost two thirds (65%) of mobile phone insurance policies include cover for this as standard but only 1% of home insurance policies do.

 Accidental damage

 In recent years, accidental damage has been one of the main reasons that people claim on their insurance and particularly broken screens. If you damage your phone at home, your home contents policy will most likely cover the damage. However, if it is just a broken screen, then you may find that the cost of the excess is more than the price of the repair and so it may not be worthwhile.

 Another common claim is water damage. Although modern phones are designed to be more water resistant, technology and water never mix well and thousands of handsets are ruined each year by spilled drinks. Accidental damage to mobile phones is covered in a fifth (18%) of home contents insurance policies but if you damage your phone while out and about, you will need to have personal possessions cover in place.

 New or refurbished?

 If you need to claim for a new handset, you won’t automatically get a brand-new phone as a replacement. In this instance, home contents policies tend to perform better with 99% of policies offering ‘new for old’ cover. By contrast, only 7% of mobile phone insurance policies offer a new replacement phone and the vast majority (93%) offer an identical refurbished handset instead.

 Excess on claims

 Mobile phone insurance policies tend to have a lower ‘excess’ on claims, ranging from no excess to £350 with the average excess being £121. Under a home contents insurance policy, the excess for any claim is set when you buy the policy and is generally anything up to £500. If your phone is an older model, then the excess alone may be greater than the value of the claim.


 Some policies have exclusions on claims, such as water damage. With the proverbial bag of rice saving many an iPhone, Apple has a mechanism to check whether a phone has been water damaged or not, which can prevent a claim being paid. Similarly, if a phone is stolen, your insurer will have expected you to have taken reasonable care of it. If you have left it unattended in plain sight, they may decline your claim.

 Defaqto provides star ratings to help consumers choose the right product for them. To see all mobile phone insurance policies and home contents insurance policies and their ratings, visit

 Anna-Marie Duthie, Mobile Phone Insurance Expert at Defaqto, says: “Mobile phones continue to be a popular Christmas gift and with the top models now costing up to £1,500, it is a good idea to have insurance in place, should anything go wrong.

 “On the whole, standalone mobile phone insurance policies offer the more comprehensive protection for mobile phones – it is what they are designed to do. However, if you already have home contents insurance, you will have some cover under that, which may be enough for you.

 “If you are getting a new phone this Christmas, it is worth considering what you would do if anything happened to it. We are all so dependent on our phones days, you want to make sure you have peace of mind should anything go wrong.”

 Top tips for insuring a mobile phone:

 If you are buying a brand new phone, try to get insurance arranged immediately, so you are covered straight away for any potential loss or damage.
 Check whether you already have insurance for your phone. Some bank accounts include it as a benefit and most home contents insurance policies have a limited amount of cover for phones.
 If your phone is not brand new, check the age limit on the policy as some insurers will only cover phones up to a certain age.
 If you did not buy your phone from a major retailer, check that your policy will cover you. For example, may policies do not cover phones bought from online auction sites.
 Think about how likely you are to make a claim. Standalone mobile insurance policies tend to be more expensive but have lower excesses in the event of a claim.
 Watch out for exclusions, which may prevent a claim being paid, such as water damage or theft while unattended. 

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