What is mobile phone insurance?
Smartphones can be pricey, and mobile phone insurance can provide you with cover in the event that your phone is lost or damaged. Depending on your needs, you may be able to insure your phone through a contents insurance policy, or directly with your provider or the manufacturer. Some credit cards even offer protection for smartphones.
What does mobile phone insurance cover?
Mobile phone insurance can cover some of the more common events that may befall your phone, such as:
- Accidental damage from drops and smashes that stop the phone from working correctly (not just scratches on the screen)
- Damage from liquid immersion, if a drink is spilled on your phone or it goes for an unfortunate dip in the pool
- Theft, although this can vary depending on the policy and whether your phone was at home or out and about at the time
- Accidental loss, though again, this can vary depending on the fine print of your policy
- Mechanical failure or breakdown, although this is more likely to be covered by a manufacturer’s warranty than a standard insurance policy
What are your options for mobile phone insurance?
1. Insure your phone with contents insurance
If you have home and contents insurance, then it’s likely you already have cover for your smartphone, through the contents component. Contents insurance covers loss or damage to your possessions at home, and depending on the fine print of your policy, this could include smartphones.
There are some potential limitations to this, specifically:
- Some contents insurance policies have a per-item limit for claims on valuable items, and if your phone is an expensive model, this may not be enough to replace it.
- Generally speaking, items worth $1,000 or more can be listed separately on your insurance if you want cover for them, but doing this will likely increase your premiums.
- Some contents insurance policies offer cover for accidental damage, but only as an optional extra. This means so you won’t be covered for damage to your phone if you drop it, unless you’re willing to pay for extra cover.
- Contents insurance only covers you for loss or damage at home, so if you want your phone to be covered while out and about – which, let’s face it, you might be a lot of the time – you’ll need additional portable contents cover.
There are ways to lower the cost of your contents insurance –for example, choosing a higher excess can lower your premiums, but you’ll need to pay more out of pocket if you need to make a claim.
If you don’t already have a contents insurance policy, then taking one out specifically to cover your smartphone may not be worth the cost, but there are other options available.
2. Coverage from your mobile provider
Some telcos offer a “Swap, Replace or Repair” or “Upgrade and Protect” program as an add-on to your subscription plan. While these programs can typically be used at any time, they often must be locked into your contract within 30 days of your phone purchase. Your phone model may also affect the terms and conditions. For example, most telco providers have their own conditions for Apple phones.
On top of the monthly subscription costs, additional exchange or replacement fees may apply. These fees may be similar to the excess that insurance policies often require you to pay when making a claim.
Other considerations include:
- Some providers only allow for a set number of exchanges or replacements a year.
- The option of repair may be limited with conditions applied.
- Additional fees may be required for services such as screen repair, if the conditions aren’t met. In some cases, repair services are not provided at all.
- Most programs do not accommodate for any loss, misplacement or theft of your device. If your device is not returned for exchange or replacement, you will be charged a ‘non-return’ fee, which is typically at the ‘fair market value’ of the device.
Most of the major telco providers in Australia – Telstra, Optus, and Vodafone – offer some form of phone coverage program. If you’re going with another provider, you’ll need to check what their coverage options are.
Some mobile phone manufacturers also offer similar programs with any of their newly purchased phones, such as Samsung Care+, and AppleCare+. See the manufacturer’s website for full details.
3. Credit card purchase protection
If you buy a phone solely for personal use with a credit card, it may be covered by the card’s purchase protection insurance policy, also known as merchandise protection or purchase security. These policies often insure purchases made with the card for damage or theft for a limited time of up to 90 days from the date of purchase, though some cards offer cover for up to six months from the date of purchase.
When reimbursing you, most providers will cover the price of the phone when you bought it, up to a defined limit. Some providers exclude cover to mobile phones that are part of a post-paid plan or contract, so consider checking the Product Disclosure Statement (PDS) or speaking to your card issuer first.
Benefits of purchase protection insurance can include:
- you only have to pay an excess if you want to make a claim, and the premiums are typically included as part of your card’s annual fee.
- You can cover other purchases as well as your smartphone.
However you may void your cover if:
- you leave your smartphone unattended in a public area or in a motor vehicle
- you fail to report that it was stolen to police and/or the relevant transport authority within 24 hours
- it is damaged due to normal wear and tear
What are some mobile phone cover exclusions?
As with other contents insurance policies, phone insurance may exclude cover in certain circumstances, such as
if your phone is damaged or lost due to circumstances that you could have easily prevented, such as leaving your phone unattended in an unlocked vehicle.
- Your phone experiences normal wear and tear over time, such as its battery life decreasing with age.
- Your phone is stolen and you fail to report the theft to the police and/or the relevant transport authority within 24 hours.
How much does phone insurance cost?
The cost of phone insurance may depend on the value of your phone, the type of cover you decide to take out, and other factors. Even if the initial cost seems relatively cheap, the premiums and additional fees are likely to add up over time. If you never need to make a claim, it may sometimes be cheaper to simply pay for any damage yourself.
You can often expect to pay about $10-$20/month for a coverage program through your telco provider, which can add up to more than $120 a year. Costs for AppleCare+ and Samsung Care+ plans are even higher. In addition to the monthly premium, there is often a “service fee”, similar to an insurance excess, of about $100-$300 if you’re seeking to replace or swap your device.
Before taking out smartphone insurance, consider asking yourself:
- Will the value of the benefits help to offset the premium costs?
- What other costs, limits and conditions are involved that could affect the coverage’s value?
What should you do if your phone is stolen?
If your device is stolen, you will usually need to file a police report as soon as possible if you wish to make an insurance claim for the loss. You will also typically need to notify your insurance provider of the loss within a certain period of time. You should always make an effort to find your proof of purchase.
Should you get phone insurance or coverage?
If you have a history of going through phones, or if you travel a lot, then it may be worth checking if you are covered by one or more types of phone insurance. However, there are potential pros and cons to each method.
If your phone is malfunctioning, rather than lost or damaged, it may also be worth asking your telco provider or the phone’s manufacturer (such as Apple or Samsung) if the manufacturer’s warranty on your device is still valid, and what it covers (such as mechanical failure or defects). In addition to the manufacturer’s warranty, you also have the right to ask your telco provider or phone retailer/manufacturer for a repair, replacement or refund for a faulty or unsafe phone device, under Australian Consumer Law.
