Don't buy this rip-off insurance!

Find out why Rachel Robson believes mobile phone insurance is a waste of money...

If there's one thing I don't like, it's insurance that rips you off. And one of my ultimate pet hates is mobile phone insurance. I just don't see the point. And to be perfectly honest, I can't say I've ever met anyone who has told me that investing in mobile phone insurance has been a wise move. (That said, I am sure one of you will now tell me otherwise.)

So why do I hate it so much? Well, for a start this type of insurance policy always seems to come with strings attached. And secondly, it can work out to be very expensive - and personally, I think there are better ways to protect your phone that don't involve throwing money down the drain.

Tricks of the trade

As I said above, many mobile phone insurance policies seem to be riddled with catches. So if you're considering taking out an insurance policy, it's really important that you take the time to sit down and read the terms and conditions of the policy carefully before deciding if you're definitely going to go with it. It might be a tedious job but it will certainly be a worthwhile one.

To give you a helping hand, here are some of the questions you should be asking yourself when doing your research:

Will family members be covered if they use your phone?
Will you be covered if you take your phone with you abroad?
Will you be covered if someone makes calls on your phone if it's stolen?
Is there an excess to pay and how much?
Will you be covered for accidental loss or damage, as well as theft?
Will you be covered for water damage?
Will your policy cover mobile phone accessories?
Will you be covered if you leave your phone unattended in a public place?
Is there a limit on how many times you can claim in a year or a month?
How big is the excess you will have to pay if you make a claim?

Exactly how much cover you get will vary from policy to policy. But having had a look through some of the mobile providers' policies, it's clear that in the majority of cases, you won't be covered if you leave your phone unattended. So if you've left your phone in an unlocked car and it's stolen, or if you've left it unattended in a public place, you won't be able to claim.

To me, this implies that in order to ensure you can make a successful claim, your phone should be stuck to you like glue at all times. But surely if your phone is permanently attached to you, you're unlikely to lose your phone in the first place - meaning there's little point in bothering with mobile phone insurance!

Vodafone also won't pay out if the damage is classed as a manufacturing problem - however, it's likely you'll be covered under your manufacturer's warranty for the first year, again begging the question do you really need phone insurance? Similarly, Orange says it won't pay out for cosmetic damage - in other words, damage which does not impair the normal functions of your phone.

It's also worth bearing in mind that if you do have insurance and your phone is lost or stolen, you need to report it to your network provider within 24 hours of discovering the theft/loss and tell the police within 48 hours - otherwise you won't be able to claim. And if you do claim, you'll probably have to pay an excess - typically, this costs between £15 and £25. So you need to consider whether you think this is worth it.

Shop around

Of course, there have to be some advantages to taking out mobile phone insurance, and for some people, it may provide peace of mind - particularly if you're prone to misplacing your phone or dropping it down the toilet. If your phone is the latest model and you'd simply be lost without it, mobile phone insurance might seem like the way to go.

But if you're going to take out an insurance policy, avoid taking it out with your mobile phone provider for the sake of convenience. Instead, make sure you shop around and take a look at stand-alone insurance which can work out to be far cheaper.

For example, both O2 and Orange offer standard insurance from £72 a year, T-Mobile charges from around £60 a year up to around £108 a year depending on the level of insurance, and Vodafone charges around £84 a year.

In comparison, taking out stand-alone mobile phone insurance is only likely to set you back around £25 a year! That's less than half price! Good websites to check out are insureyourmobile.co.uk and mobilephoneinsurance2u.co.uk. Once again, give the terms and conditions a good read.

The alternatives

If you don't fancy taking out mobile phone insurance, are there any other ways to protect your phone?

One of the first things to do is check your home insurance policy to see whether this covers your mobile phone sufficiently. It can be worth adding personal possessions cover to your policy to ensure that your mobile will be covered outside the property (and not just in it) - and of course, this will also cover your other valuable items such as your laptop, your keys, any jewellery you are wearing, your MP3 player and your wallet or purse.

Just be aware that there will be an individual limit on the value of each item (typically £1,500) - so if your item is more valuable than this you will need to name it individually on the policy. For more information, read Make sure your home insurance covers this!

On the other hand, you could simply put some money aside each month into a savings account. That way you'll have funds to fall back on if you did lose or damage your phone. And if you hunt around for a decent account - such as the ING Direct Savings Account which offers a guaranteed interest rate of 3.20% for the first year - you'll accumulate a tidy sum of interest as a bonus!

Of course, you could simply keep an old phone at home somewhere safe. I've got one tucked away in a drawer - it may not be the latest model, but if something happened to my current mobile, at least I've got that to fall back on. And duplicate SIM cards are easy to pick up cheaply. What's more, as I am on a monthly contract, I will eventually get a new phone anyway!

Whether or not you choose to plump for mobile phone insurance is entirely your decision. But if you do decide to go for it, do your research properly and don't be coerced into anything. Only recently my mother contacted Orange to cancel her phone insurance, when she was offered a month for free as a way of convincing her to keep her policy.

Having just spent half an hour waiting to get through to cancel her insurance, she sensibly said no - after all, I'm sure Orange was simply hoping she'd forget to cancel again once the free month was up and continue forking out for the insurance. Sneaky.

So remember, keep your wits about you, shop around and only buy a policy if you really believe it's right for you!

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