Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Mobile Phone Insurance
Roz Sanderson
27th Jun 2021
Mobile phone insurance is something you don’t think about until you lose your phone and suddenly your whole world collapses. However, the problem with phone insurance is that it’s normally very overpriced. Here’s how to keep your phone safe without breaking the bank.
- What does phone insurance cover?
- Do you even need phone insurance?
- The 4 different ways to insure your phone – which is best for you?
What phone insurance covers
Mobile phone insurance will usually cover loss, accidental damage and theft across the globe. You can expect to pay on average £6-8 a month with most mobile phone providers or between £25 and £75 a year with independent insurers. Generally the more expensive the phone is, the costlier the insurance.
When you’re setting up a new contract, or buying a new handset, the retailers will often try to sell you insurance with the lot, especially if you’re getting a relatively high-end model. Don’t get sucked in! With some quick research you’re more than likely to find a better deal elsewhere.
Do you even need phone insurance?
This is an important question to consider. Obviously, losing your phone is extremely annoying and can be an expensive thing to replace. However, companies will often try to frighten you into paying over the odds for some cover. Consider these questions before you jump straight in:
- Have you lost a lot of phones in the past?
- Are you prone to breaking gadgets?
- Do you live in a high-crime area?
If you answered ‘no’ to these questions then insurance is probably a waste of money. If, on the other hand, you answered yes to any of them, chances are that insurance will be cheaper than the cost of replacing your phone time and again.
- If you’re on pay-as-you-go, then the risks are minimal as you haven’t set up a direct debit so there’s a limit to the amount of fraudulent calls that can be made. Insurance in this case should only really be necessary if you’ve got a very expensive, high-tech gadget, and even then you may be able to get it covered on your home insurance.
- If you’ve got a contract phone and you’re likely to lose or break it, then it’s best to get cover for your phone. This is because even if you don’t want to replace the phone, you might still have to pay the monthly fee until the contract runs out.
How to get mobile phone insurance – which way is best for you?
Once you’ve decided that you need insurance, the next thing to consider is the best way to go about it. There are a number of different ways you can cover your phone including:
- Getting insurance specifically for your phone
- Including it in your home insurance
- Getting phone insurance with your paid-for bank account
- Insuring it yourself
Mobile phone providers typically charge about £75-£100 a year for insurance, regardless of the value of your handset. This is good if you’ve got a more expensive handset, as you will be getting more for your money if you do lose your phone. However, it’s too much for cheaper models.
Home contents insurance is a must if you have possessions. As well as protecting any accidental damage to the building, like fire, floods or vandalism, it will also provide cover for the contents of your home, like your TV, sofa and clothes.
Some home insurance providers will also provide extra cover for items that are taken out of the home, like handbags, laptops, bicycles and mobile phones. We’ve taken a look at the ones that offer mobile phone insurance as an optional extra.
There a quite a few banks that offer mobile phone insurance when you sign up to their paid-for current accounts. It’s worth checking out to see if your bank offers this as it could save you in the long run. Often they also offer things like basic travel insurance as well, for a small monthly fee.
This really can be the best form of financial protection, and is ideal if you’re not prone to breaking or losing your phone very often. By setting up a standing order of around £5 a month into a high interest savings account you can quickly accumulate enough money to buy yourself a new phone if yours gets damaged or stolen. See our article on savings accounts for more information.
If you’re unlikely to claim on your insurance then it can feel as though you’re just throwing money away if you take out any type of cover. The good thing about self insurance – i.e. setting up a special savings account to cope with loss or damage – is that you can quickly save up enough to pay for a brand new phone if yours does happen to go missing or get damaged and you can simply stop paying money in when you feel as though you’ve accumulated enough. And, because you’ve got it in a high-interest account it’s actually likely to make you money, so if you don’t end up claiming the cash and interest is all yours.
Why doesn’t everyone self insure then? The downside to insuring yourself is that if something happens to your phone after just three months or so, you’re unlikely to have enough in your account to buy a decent new phone straight away. Also, the money in your account may not cover the cost of any fraudulent calls made on your phone. So keep that in mind if you decide to be your own mobile phone insurer!
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