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Smartphones have become a necessity these days, and many of us are buying the high-end ones on equated monthly instalments (EMIs) which allows one to pay for these phones over time. But what if your phone is stolen or damaged ? You will still have to pay the EMIs on your phone. Here’s where an insurance cover on your phone can come to your rescue.
Increasing instances of theft and break downs means you could easily lose expensive items. “It always makes sense to buy an insurance cover when you buy an expensive item,” says Amarnath Ananthanarayanan, chief executive officer (CEO) of Bharti AXA General Insurance.
There are a few ways in which you can insure your phone. Firstly, extended warranties can help with the repairs of your phone for two years as repair costs of smartphones are high. Retailers say those who buy smartphones on EMIs don’t bother with an extended warranty. Experts say this is because such buyers pay a few thousands a month for phones costing Rs 30,000-35,000, and don't want to cover the costs because it’s too low.
“Insurers offer group covers for smart phones through the retailers. This could be in the form of higher warranty, mostly for one year,” says Ananthanarayanan. Most retailers see 55-57 per cent of customers opting for extended warranty. The first year warranty on mobile devices is offered by the manufacturer.
“Mostly, mobile devices develop problems in the second year and, hence, an extended warranty is offered in the second year,” says Himanshu Chakravarthy, CEO, The Mobile Store. The warranty should be bought within three days of buying the handset. There is no warranty beyond the second year. For a Rs 37,990 Samsung Galaxy S4 (online price), the cost of extended warranty is Rs 759. This could be as low as Rs 300 for a phone costing Rs 10,000-15,000.
The other way of insuring smartphones is theft covers offered by insurers. This can be claimed only if the phone is stolen, not when it is lost. “These are individual policies only but are looked at as group because stores have a certain volumes, say 5,000 or so. You can claim against the policy by filing a First Information Report (FIR),” says Chakravarthy. But hardly 8-10 per cent customers opt for a theft cover. It’s cost structure is similar to extended warranty.
There are limited insurers in this segment as of now. Some insurers are planning to get into the smartphone insurance segment. ICICI Lombard, for instance, is looking to enter the segment and Bajaj Allianz General Insurance offers such a cover on a case to case basis. So, you will need to look at the exclusions carefully before buying cover.
Public sector insurers also offer group mobile policies to retailers that cover theft, loss and damages. The cover replaces the insured piece with a new one of the same specification and capacity. But you need to be careful about the exclusions, warns a public sector insurance executive. “If you claim against the policy because the device has disappeared, that is, you are not sure that it got stolen, mechanical breakdown, inherent defect, damaged at the time of repair, stolen from an unattended car and so on, you will not get anything,” he said.
