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Friday, 5 August 2011

Consumers potentially wasting over £588 million per year

Latest news from http://giffgaffnews.com

Consumers potentially wasting over £588 million per year


  • 1: Over half (56%) of the UK’s mobile owners who have an insurance policy (10.4 million) are not aware that their home insurance policy covers their mobile phone, so could be paying twice

  • 2: 78 percent of all mobile owners have never made a mobile phone-related insurance claim

Millions of UK mobile users could be unknowingly paying twice to insure their handset, according to a new study by SIM-only mobile network giffgaff. The research reveals that approximately 5.7 million mobile customers in the UK could be doubling up – by taking on insurance from their mobile provider when their handset is already covered by their home insurance policy.

All major networks and handset retailers encourage consumers to take out insurance for their new handset at point of purchase – charged at £8.20 per month on average. This means consumers could be throwing over £100 per year down the drain if they also have a home insurance policy. Some major networks and handset retailers charge up to £14 per month to insure the latest Smartphones and despite the high cost, 78 percent of those with mobile phone insurance have never even made a claim.

This situation could be related to the level of customer confusion surrounding what their home insurance policy covers. One in three people (30%) admit to paying for separate mobile phone insurance without knowing what their household policy covers.

The research also revealed a change in consumer behaviour over the last five years, with a stark rise in the number of mobile users taking out insurance. In 2006, only three percent of respondents insured their handset, however, in 2011, out of the people who have an active insurance policy in place, 32 percent have open taken up an insurance policy in the last 12 months – a number which is only set to soar as mobile handsets increase in capability and price.

James Atkinson, editor of Mobile Magazine commented on the changing behaviour of the mobile user:

“As technology gets more and more advance, the price of mobiles is really rocketing,which makes consumers more wary about loss or damage to their new prized possession. There is a lot of emotion involved when buying the latest mobile or gadget,so people’s judgement can sometimes be a little clouded at point of purchase and the major mobile retailers should not take advantage of that.”

Mike Fairman, CEO of giffgaff who commissioned the research, said:

“The rise of the Smartphone has seen the rise in uptake of insurance policies soar, so it’s really important that consumers are aware of which policies cover their handset, to avoid paying over the odds. The mobile retailers will only be too happy to sign people up to the higher premium insurance policies, and they often apply the pressure using scare tactics to make consumers sign up on the spot.

“As giffgaff is community-led we want to help our members make informed decisions, our reason for unveiling this big issue. I’d urge anyone who’s thinking about insuring their handset to check with their home insurance provider to avoid wasting their hard earned money.”

Which? Mobile, the UK’s leading consumer association offer the following tips to consumers when considering their options for mobile phone insurance here, and below:

  • Before you buy, read the terms and conditions carefully, check the excesses and exclusions and weigh up the policy.
  • It’s worth bearing in mind that if you don’t have mobile insurance, you’ll be liable for the cost of any calls made if the phone is stolen.
  • Some retailers will try to bundle in mobile phone insurance when you sign up for a new contract and handset, especially for high-end models.
  • But don’t be pushed into buying the first mobile insurance policy you’re offered. You could find a better deal if you take a bit of time to shop around.
  • If you do buy mobile insurance, by law the seller must send you a policy summary setting out the key points in the cover and a ‘statement of demands and needs’ to show why you were recommended the insurance in the first place.
  • If you take out mobile phone insurance and then decide you don’t want it, you have a 14-day ‘cooling-off’ period, starting from the day you purchased it, during which you can cancel the policy and get your premium refunded in full.

For more information on giffgaff – the community led mobile network, visit www.giffgaff.com.


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