How much is too much to protect your smartphone?

PHONE INSURANCE:With our level of dependency on smart phones quite high - and with the price of replacing them so costly, perhaps it is time to consider the insurance options

ANYONE WHO has observed the behaviour of recent converts to the growing iPhone cult will not be surprised to learn that addiction to the Apple smartphone has been identified as a genuine phenomenon. A recent study of 200 students conducted by Stanford University revealed the high level of dependency that exists among iPhone owners, with 41 per cent of respondents saying that it would be “a tragedy” to lose their beloved gadget.

While this may seem a tad melodramatic, losing or breaking a high-end smartphone such as a BlackBerry, iPhone or Apple’s latest challenger, the Sony Ericsson Xperia X10, is not only seriously inconvenient but can leave you considerably out of pocket. Leaving aside the withdrawal symptoms from being denied seeing YouTube videos while on the move and having to actually consult a map for directions before going on a trip, the cost of replacing a smartphone handset can come as a nasty surprise. Say, for example, you buy an iPhone on a bill-pay basis, ie you sign up for a contract. The iPhone 3GS handset will set you back between €129 and €199 up front, depending on whether you go with Vodafone or O2 (and which plan you choose).

If you then lose or break this phone, and you don’t have it insured, the replacement cost shoots past the €500 mark, unless you are entitled to an upgrade. O2 says it encourages people in this situation to replace their handset with a pre-paid iPhone – which comes with a price tag of €519 – rather than taking out a second contract.

So once you move into smartphone territory, your mobile becomes a more serious investment. Not only are they more valuable, but they are also more fragile than less sophisticated phones. Gone are the days when you can fix your mobile after it’s fallen in the toilet by drying it out in the hot press, or drop it on the ground without fear of its screen shattering. So it would be foolish not to sign up for mobile phone insurance, right? Not so fast.

In the past, the verdict on mobile phone insurance tended to be that it was a waste of money on the grounds that the annual cost of the cover could exceed the value of the handset, because it was possible to get such cheap replacements or even a free upgrade. However the stakes are higher with a smartphone, so the case for taking out insurance is stronger.

In terms of insurance designed to cover high-end devices like iPhones, O2’s Phonecover Extra insurance costs €9 per month, while Vodafone’s Stay Mobile Plus product has a monthly cost of €9.99. The Carphone Warehouse offers an insurance policy called Lifeline. The cost varies depending on the type of smartphone covered, but for an iPhone it’s €13.75 a month.

Therefore you could be looking at an annual premium of up to €165, which is close to one-third of the replacement cost of the item being insured. This is expensive in comparison to other types of insurance, for example motor cover, but on the other hand you’re more likely to lose or smash your phone than you are to write off your car.

Possibly even more important than the cost of the insurance is the matter of whether or not it provides adequate cover for your needs. Before signing on the dotted line, make sure that you’ve trawled through the terms and conditions of the policy to check exactly what is, and more importantly, what is not covered.

The Carphone Warehouse’s Lifeline insurance will pay out if you drop your phone in the toilet or into a drink, or – iPhone aficionados look away now – accidentally put it in the washing machine. It will also provide cover if you lose your phone by leaving it on public transport or on top of a car, which Vodafone’s insurance will not.

However, Lifeline will not cover theft from a public place. Essentially if you leave your phone in an area where people you don’t know have “easy and unrestricted access” to it, such as on a table in a pub or in your bag on a seat, then you’re out of luck.

Many policies will not cover theft from an unlocked premises, unless proof of a forced entry or exit to that premises can be provided. So for example if you leave your phone in a gym locker which is broken into you will usually need to provide evidence of this to the insurer. If it was unlocked, then you’re probably not going to be covered.

As with most providers, Vodafone’s insurance doesn’t cover the theft of your phone if it’s left in a car, unless the vehicle is locked and the phone is taken from a locked boot or closed compartment. Usually you will be limited to a maximum of two claims on a mobile phone insurance policy per year, which seems pretty fair.

O2’s Phonecover Extra will cover for liquid damage and cracked screens, and it will also provide compensation of up to €1,500 if someone steals your phone and racks up a bill by making calls, while unauthorised calls of up to €2,500 will be covered by the Carphone Warehouse. Even if you succeed in making a claim on your phone insurance, then you will probably still have to bear some of the replacement cost yourself before the insurance kicks in. This amount is known as the excess and is generally around €35.

For those smartphone users who are also homeowners, there could be a cheaper alternative. First off, many home insurance policies will automatically cover your phone against “standard perils” such as fire, flooding and burglary, while your phone is in your house, although your phone is unlikely to be covered for accidental damage in the home.

Some (but not all) insurers will also allow you to specify your smartphone under an optional extra known as “all risks” cover. This cover protects personal valuables from loss, theft or accidental damage both inside and outside your home. With Allianz, adding an iPhone worth €500 to the all-risks section of an existing home insurance policy could cost as little as €10 extra per year (with no excess), depending on the particular policy. A spokesman for the insurer points out that they’re not actively targeting mobile phone insurance business, but for existing home insurance customers this could offer a cost-effective alternative.

Zurich, which underwrites the mobile phone insurance sold through O2, also allows customers to insure mobiles under their house insurance policy, but says that the cover would not be as comprehensive as the specialised Phonecover product.

It’s also worth looking into some of the impressive new iPhone applications that can enable you to track the location of your handset, and therefore increase the chance of recovering it in the event of loss or theft. And finally, make sure to invest in a good quality cover for your phone that protects the screen from scratches and falls.