Having your phone stolen can leave you seriously out of pocket, not to mention without the device you most depend upon. Picture: 123rf.com/Ian Allenden
Having your phone stolen can leave you seriously out of pocket, not to mention without the device you most depend upon. Picture: 123rf.com/Ian Allenden

For many of us, our cellphone is our most personal and most-used device - hard to live without and viciously expensive to replace.

If you're paying off your phone as part of a contract with your provider, it makes sense to insure it. But is it worth insuring a phone that you've paid off, especially if it's not the latest and greatest model?

If you have an emergency fund with enough money in it to cover the cost of a new phone, you've effectively self-insured and need not have insurance, no matter what phone you're using. But about 60% of us have no emergency savings.

If you have insurance on the contents of your home, it's generally cheaper to add your cellphone to your policy than a standalone insurance from your phone provider.

Among the top-selling phones at MTN and Vodacom at the moment are the Huawei Y9 Prime and the Huawei P30 Lite. Comprehensive cover from both providers would cost you R85 a month to insure the Y9 Prime, though the replacement value at MTN is R5,500 and at Vodacom R5,000.

Comprehensive cover for the more expensive P30 Lite would cost you R107.94 a month from MTN and R115 a month from Vodacom. Again, the replacement value set by MTN is R500 more than at Vodacom.

MTN will charge you an excess of R300 in the event of a total loss (if your phone is stolen or not economical to repair) and R150 if the phone is repairable. Vodacom charges an excess of R450 (if the cover amount is between R5,000 and R7,500) to repair or replace with a "good-as-new-device", or an excess equal to 25% of replacement cost or R250 (whichever is higher) if the phone has to be replaced with a new one. And watch out for extra excesses that apply in the first six months of the contract.

Note that Vodacom and MTN insure new phones only. Typically, you must have purchased the phone within 30 days of the date of applying for insurance.

When you insure your phone with MTN and Vodacom's insurers, there is no individual underwriting when you take out the policy. In other words, your premium isn't determined by your individual risk profile. So if you have had two phones stolen in the past year or have a history of dropping your phone down the toilet, you pay the same premium as someone who hasn't claimed for a stolen or damaged phone. Your premium is determined by the retail price of the device.

However, once you have the policy you can be penalised with an additional excess on your second or third claim if these are submitted in a specified time period.

Replacement value

Mandy Barrett, the head of marketing and volume sales at Aon SA, says you must insure your phone at replacement value. "Insurance is usually based on new for old. You insure for what it would cost to replace the item today. So if your phone is lost, you'll get a replacement phone or the closest newest model to the model you had."

It is not advisable to adjust to current market value, she says. "We don't insure on current value for personal goods. If you were to lose your phone, where would you source a second-hand phone?

"If you're adequately insured and at replacement value, you'll get paid out. But if you're underinsured, the insurer will apply average." If your phone is worth R20,000 and you decide to insure it for R10,000, you're taking 50% of the risk. However, in the event of a loss, you'll get 50% of R10,000.

Common exclusions

Comprehensive phone cover covers you in the event of accidental damage, theft or loss and typically excludes:

l Wear and tear, gradual deterioration, scratching or other superficial damage;

l Any failure of electronic circuitry or bat-teries and any damage arising from such;

l Any problems relating to software and any damage arising from software, including malicious software such as viruses;

l Any loss or damage resulting from carelessness or negligence; and

l Loss or damage arising from a manufacturer's defect.

Vodacom's policy states in bold capital letters that "your claim will not be paid if the Vodacom SIM card listed on the schedule is not in use with the insured device at the time of accidental damage, theft or loss".

Bevan Collins, the managing partner at Harnacks, says the high cost of repairing new smartphones makes the case for insurance compelling. However, the cost of insurance is high.

If you have a lower-value, older phone that is paid off, remember the replacement cost has probably come down dramatically and if you insure it with a fixed excess, the excess will bite you when you claim, says Collins. If you have a new or almost new R25,000 phone, it's probably wise to insure it, he adds.

"Get quotes from your cellphone provider's insurer and from the insurer of your household contents and compare the excesses and not just the premiums."

Barrett says excesses applicable to phone cover differ from provider to provider, but are between R500 and R1,000 on average. Sometimes it's a percentage of value, so be aware, she says.

The basic excess for a phone when specified on a Santam policy under all risk is R750, says Marius Steyn, the personal lines underwriting manager at Santam.

Santam wasn't able to provide quotes to insure the new Huawei phones because the rating of the item depends on your risk profile.

Although adding a phone to a household contents policy is usually cheaper, it isn't always.

Auto & General quoted a consumer seeking cover for both Huawei phones a premium of R233 under a contents policy. That's R33 more than the quotes from Vodacom.

Old Mutual quoted another consumer R79 to insure one of the Huawei phones for up to R6,000, with an excess of R750.

Collins says you must do your homework. Compare premiums and excesses and look carefully at the policy terms.

Barrett says that structuring your policy so that you have the right cover and you're paying the premium you can afford is a delicate balance.

A broker can help you save where it makes sense, she says. Taking a higher excess can reduce your premium. Also, make sure your phone is consolidated on one policy with all your other insured goods, so you benefit from a better premium, says Barrett.

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