Do I need mobile phone insurance?

(Image credit: Getty images)

published 20 July 2022

‘Do I need mobile phone insurance?’ is a question you might be asking yourself as the cost of living crisis continues to bite and money gets tighter.

Smartphones can be expensive and having mobile phone insurance means you won’t be left out of pocket if your phone gets damaged or stolen.

Forbes Advisor spokesperson, Mark Hooson (opens in new tab), told us: “The latest smartphones can cost more than £1,000, which is why many of us pay in monthly instalments.

“If you break or lose your phone, however, you’re not off the hook for the monthly repayments - you’d have to keep paying for it, as well as a replacement.

“Mobile phone insurance protects against that kind of situation, paying out for a replacement under certain circumstances.”

But at a time when many households are making cutbacks, is mobile phone insurance an expense you could consider ditching too?

What does mobile phone insurance cover?

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Exactly what mobile phone insurance will cover you for will depend on the policy and the level of cover you choose.

A good policy should cover you for the following:

Accidental damage: covering the cost of repairs if you accidentally damage your phone.
Liquid damage: paying for repairs or a replacement if your phone is damaged by water.
Screen damage: covering repair costs if you crack your screen, for instance.
Mechanical breakdown: if your phone stops working through no fault of your own, your phone should be repaired or replaced. Cover can include battery malfunction.
Accessories: protecting your phone’s accessories, such as your case and headphones, if they are damaged.
Worldwide cover: cover will usually be extended to include use of your phone while you’re abroad. The number of days per trip will depend on the policy.
Unauthorised calls: covering the cost of calls and data usage from your phone if it has been lost or stolen (limits usually apply).
Theft: covering the cost of a replacement phone if yours is stolen. Note that you might not get a payout if your phone is stolen after leaving it unattended.
Loss: covering the cost of a replacement phone if you lose yours.
E-wallet cover: if your phone is stolen, you’ll be refunded for the cost of unauthorised transactions made using your e-wallet facility (limits usually apply).

Before buying a policy, make sure you don't already have cover elsewhere, such as through your home insurance.

Best mobile phone insurance deals right now

Below, we’ve highlighted some of the best mobile phone deals available, using an iPhone 13 and a Samsung Galaxy S22 as examples. We’ve used the cheapest handset each time.

Do I need mobile phone insurance?

Whether you need mobile phone insurance will likely depend on how much your mobile phone handset is worth, your financial situation and your attitude to risk.

An alternative option is to put money into a savings account each month to cover the cost of a replacement phone if something went wrong - this is known as self-insuring.

To do this, it’s best to work out how much you would need to put aside for a replacement phone by comparing refurbished or second-hand handsets on eBay.

For example, at the time of writing you could buy a second-hand iPhone 13 (128GB) handset for £475 on eBay, meaning you’d need to save around £40 a month to have enough in your account after a year.

However, this can work out to be more expensive per month compared to paying for phone insurance and there’s also the risk that you’ll damage your phone and need a replacement before you’ve saved up enough. Plus, you won’t be covered for unauthorised calls.

But on the flipside, if you don’t need to claim, you get to keep the cash in your savings account (plus any interest earned) rather than lose it to your insurer.

Where can I buy phone insurance and how do I compare policies?

You can buy a mobile phone insurance policy from your network provider or from a standalone insurer (which will usually be cheaper). As part of your comparison, check the monthly and annual cost of the policy, as well as exactly what’s included for that price.

Pay close attention to any exclusions, the excess you’ll need to pay (typically anywhere between £25 and £150) and how long it will take to get a replacement phone if you need one. Bear in mind that you won’t necessarily get a brand new phone. You’re more likely to receive a refurbished phone or an alternative, equivalent model.

Before buying a policy, make sure you don't already have cover elsewhere, such as through your home insurance.

Liz Edwards (opens in new tab), editor-in-chief at Finder (opens in new tab), told us: “Check if you already have cover for personal possessions away from home in your policy - some include it as standard.

“You may need to pay to add it but it could still be cheaper and it will cover other belongings, too. Certain policies cover mobiles only under a specific “gadget cover” add-on.

“The downside of covering your phone on your home insurance is that if you need to make a claim, your excess is likely to be higher than it would be on a standalone policy, and your home insurance premium could go up at renewal time.”

Rachel Wait is a freelance journalist. She has been writing about personal finance and consumer affairs for over a decade, covering everything from credit cards and mortgages to pensions and insurance. She has written for a range of websites and national newspapers, including Mail on Sunday, the Observer, Forbes and the Spectator.

Rachel is keen on helping consumers understand their finances.