Mobile users are ‘overpaying for their insurance’

A fifth are paying double, says research

MOBILE phone and computer users are overpaying for insurance because firms are failing to be transparent with them, a Central Bank report has found.

One in five people who take out mobile phone insurance do not cancel their existing policy when buying a new phone and end up paying double, according to the Central Bank’s research.

An inspection of Ireland’s three leading firms, which have 80% of the market share, found customers are pressured into buying addon insurance at the point of sale.

The report suggested that overestimating the probability of product failure is pushing demand for add-on insurance – despite the claims made via add-on insurance being substantially lower than other forms of insurance.

Furthermore, the report suggests that customers are unlikely to choose the cheapest option because they do not consider alternative offers and are put under time pressure.

Last year, a Central Bank report showed most people did not plan to insure their electronics until it was sold to them as an add-on.

Daragh Cassidy of insurance comparison site Bonkers.ie said the findings were ‘unsurprising’.

He added: ‘The whole point of insurance is that it’s there to protect you financially in your hour of need. But if you’ve been paying for inadequate insurance, or been mis-sold a policy, then it’s actually costing you financially.’

Mr Cassidy advised customers to shop around and not to be pressurised into buying insurance.

He also urged people to remember there is a cooling-off period where you can change your mind. ‘Some insurance policies won’t cover you for accidental water damage, which is a common reason for damage to smartphones.

‘Also, many people are often unaware that their policy will also have an excess, which means you’ll have to pay the first part of any claim yourself, meaning you’ll still be out of pocket if something happens to your phone or laptop.’

Cathie Shannon, director of general insurance at Brokers Ireland, warned buying add-on insurance at the same time as a new gadget is a bad idea unless you have taken ‘professional and clear cut advice’ from an insurance broker – ideally a specialist in this field.

She said: ‘Add-on insurance is generally not a good idea. It’s better to make a separate, independent transaction for insurance cover.

‘Overall we would strongly support the message from the Central Bank of the need for clear and understandable information for consumers.’

‘You may still have to pay an excess’