Short-term insurance is where an insurer agrees to insure a risk in return for a premium.  No insurer is prepared to provide unlimited cover as it makes no economic sense to do so. Insurers therefore try to limit their exposure by exclusions and making the cover dependent upon the terms and conditions of the policy.

The Ombudsman for Short-Term Insurance (OSTI) offers the following advice to consumers when considering cell phone insurance:

  • You have a choice: you do not need to take the insurance offered to you when you enter into a contract with your cell phone service provider. If you already have an All Risks policy with your insurer, you have the option of including the cell phone on your existing policy. Compare policies on offer to find out which one best suits your needs.
  • Know your insurance policy: Ask for a copy of the policy wording before purchasing the policy for your cell phone. Familiarise yourself with the terms and conditions of the policy. This will afford you the opportunity to ask questions at the sales stage. Obtain clarity on anything that you do not understand before you commit to taking out the policy.
  • Do not leave your cell phone in an unattended motor vehicle: Most cell phone insurance policies will exclude cover in the event that you have left your cell phone in an unattended motor vehicle and in plain sight.
  • Alternating the use of SIM cards in the insured cell phone: Many consumers have had their claim for a stolen or lost cell phone repudiated due to the fact that a SIM card other than the contract SIM card was being used in the cell phone. Often the insurance policy is sold along with a contract, cell phone and specific SIM card.
  • Make sure that the correct cell phone is insured: When upgrading your cell phone contract make sure that your new cell phone is insured on your existing policy. If your new cell phone is stolen or lost and it is not listed on your policy, your insurer will not indemnify you for your loss.
  • Be careful when lending your cell phone to other people: Some insurance policies may contain a restricted user clause. If you lend your cell phone to another person who is not listed as the user and it is stolen or lost whilst in their possession, your insurer may repudiate your claim.

Insurers who offer cell phone insurance are not exempt from the Policyholder Protection Rules nor The Short-Term Insurance Act and if consumers feel that their insurer did not disclose information or they have been treated unfairly, they do have recourse and can contact our Office to lay a formal complaint.

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