Consumers may be caught out without phone cover

Wednesday, 26 July 2017

Are you permanently connected to your smartphone?

Insurers are warning that there are some potential fish hooks that could get in the way of an insurance claim if you ever have to replace it.

Richard Godman, manager of technical underwriting for personal insurance at Vero, said people needed to understand how their insurance cover worked.

'New Zealanders are increasingly using their insurance cover to claim for smaller losses like mobile phones, and that can have an impact on cover limits.'

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He said most contents policies would cover a phone if it was lost, damaged or stolen anywhere in New Zealand.

But there were exceptions.

'Some cheaper policies will only provide cover for contents in your home and others may exclude devices entirely. You may need to purchase an additional extension if you're not automatically covered,' he said.

At IAG, a spokeswoman said some of its policies were more restrictive about only covering loss or damage that happened at home.

'Also some covers exclude certain types of loss or damage such as accidently loosing or damaging property while covering major events such as fire, burglary, earthquake, storm or flood,' she said.

'We recommend to avoid surprises at claims time, customers should check the specifics of their insurance policy to make sure it meets their needs and if in doubt about coverage contact their insurer to confirm and make sure the necessary cover is in place.'

Whether your insurer will replace your phone with one the same, or a newer model, depends on the type of policy you have.

Replacement cover means your phone will be replaced with a brand new one, or an equivalent if your phone is no longer on the market.

If you only have indemnity cover, you get the current market value of the phone. Godman said this could sometimes be just a couple of hundred dollars.

'Even if you have a replacement policy, most insurers set an age limit on how long a device is eligible for replacement cover.'

He said people would need to cut off their phones quickly if they were stolen. Vero's Maxi Contents cover only offers cover for charges incurred on a stolen phone up to $500 and up to 24 hours after it was taken.

In most cases, you need a travel insurance policy if you want cover outside New Zealand.

Most residential contents policies will cover your business phone or laptop, as long as it was also the device used personally. But if you a device was solely for work it needed to be covered by a business policy.

Karen Stevens, the Insurance and Financial Services Ombudsman, said people needed to understand the cover they had.

'If you pay less in premiums, you are likely to get less cover.  If you want to make sure, read the policy and ask the question about specific items you want cover for.  A typical example is jewellery.  There may be a capped amount per event and, depending what cover you have, the limit will be higher or lower.'

Research from Canstar shows that 62 per cent of people were confident they had enough home and contents insurance but only 49 per cent understood their policy documents and what their policies would cover.

'When it comes to insurance it's a case of 'buyer beware',' said general manager Jose George.

'With insurance policies  it is definitely not a case of everything is equal and where most policies will broadly contain the type of standard clauses you would expect, the devil really is in the detail.

'If you have particular items or equipment that you want insurance cover for, check your policy and if in any doubt speak to your insurer.'