Word count: 953 Read-time: 5-7 minutes
You may have read an article in recent weeks or months about a report published by the BIBA (British Insurance Brokers Association) that broadly criticised mobile phone insurance as a whole. The BIBA is a body that largely protects household insurers, which makes the ‘research’ considerably biased - read on for why …
The article criticized the industry as a whole, without dissecting the good from the bad. There was no positive solution on reading. For example there are a number of mobile phone insurance options that cover the customer whilst making economical sense. There are also a number of other benefits that were ignored – for example the time of replacement for those who need their phone back as soon as possible.
When you do the maths, the BIBA report ‘research’ was almost entirely unfounded.
One of the key criticisms that the report levels was that many do not cover loss. That is one of the 2U policy’s main selling points! 2U is one of the limited few who DO COVER LOSS. Why 2U policy was not included is unknown, especially given that 2U are so widely publicised on the web – type “mobile phone insurance” into www.google.com or www.msn.com. And you will be sure to find 2u.co.uk or 2U affiliate resellers. Did this report’s researcher do all their homework?
The principle problem with phones and insurance is that most people are not aware of the replacement cost - ie the value - of their phone. Because many people are given the phone free, or at a highly discounted rate, they do not realise how much they actually cost without the contract.
For example, the highly popular Samsung D600 is about £240. The increasingly popular Nokia 8800 is about £520 - £550 to buy if you had to replace it.
Now, if you have a cheap phone (eg only worth £100) and an expensive insurance premium (ie £8 to £10 per month), then obviously, this is not good value. A year’s premium would cost you £120 ie more than the value of the phone.
However, if you get an effective policy, such as the 2U cover, it represents good value for money. Take for example, the Samsung D600. It is worth about £240. It goes on the Standard policy at £5.88, covering the phone for the full 2U cover (loss, theft water damage etc). A year’s cover is then £70.
That means that the customer would have to keep their phone and keep insuring it for 3 YEARS before it became uneconomical to insure! How many people have their phones for 3 years? Not that many in today’s market! Most upgrade to the latest phone each year or at least once every 2 years.
This means that the customer is cost effectively protecting themselves.
Yes, one could argue that customers could simply upgrade to a new phone if their phone is lost or stolen etc … IF the network will let them. If the customer spends less than £30 per month on average, most networks will not upgrade a customer within the 12 months of the contract. In our experience a customer must have a very high bill-spend to obtain an upgrade within 11 months from signing a new 12 month contract.
For this reason, we recommend people insure their phone for at least the first 9 to 11 months of their contract. If you then wish to cancel the insurance, you are free to do so with the 2U policy, because there is no long-term contract (some other providers do insist on a 12 month contract). Once you have later upgraded to a new phone, you can then get that new phone insured.
Another major flaw with this report is that it suggested that a customer might be better suited to add their phone to their home insurance. There are 3 main reasons why that would be singularly unwise;
1. Usually home insurance policies have a FAR higher excess than any mobile insurance policy, often £150 plus.
2. If you make a claim (albeit relatively small) for your mobile on your house insurance, what is going to happen to your house insurance premium next year? It will go through the roof. Now who might benefit from your house insurance going up next year? Who was this report produced by again? … The BIBA, the British Insurance Broker’s Association (quote from their website) is a “general insurance organisation. We represent the interests of insurance brokers” – and lists most major home insurance companies among their members - http://www.biba.org.uk/consumer/partners.html
3. How long would you comfortably be without your phone? You might expect it to be a long while for your house insurance to process a claim. From personal experience, the last time a family member of mine had to claim on house insurance, it took WEEKS. Most customers cannot accept to wait weeks for their phone to be replaced. 2U Insurance processes claims within 48 hours. Are household insurers experts at replacing phones?
Would you go to get your tooth fixed in a general hospital? Probably not. You would go to the expert, the specialist - the dentist. In the same way, intelligent people use specialist insurance firms.
Customers should always make their own informed decision. If you have a cheap, old phone, it would not be worth insuring (2U would not start insuring any phone older than 6 months). However, if you have a phone that is less than 6 months old, and worth over £100 (as are most to replace) then a high quality, low-cost policy such as the 2U Insurance, is a cost effective method to get your phone protected. Shop around online and you will find the best protection for you.
For the 2U Insurance go to your 2U site at http://www.2u.co.uk/
