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So far this year we have received 20% fewer complaints about mobile phone insurance – compared with the same period last year.
This reduction is perhaps partly due to the work we have been doing with the main players in the market. We have seen a real willingness in this sector to learn lessons when things have gone wrong – and we have worked closely with the businesses and the regulator to put things right that weren’t working.
However, in the complaints we are seeing, we are finding in the consumer’s favour in roughly three quarters of cases – so there is still some work to be done in this area.
Our lead ombudsman, Caroline Mitchell, talks about some of the work we have been doing so far in ombudsman focus.
The case studies that follow illustrate some of the most common problems we see in complaints involving mobile phone insurance, including:
Miss R was out in a bar with some colleagues. They were sitting at a table and Miss R’s handbag was between her feet.
When Miss R left the bar a couple of hours later, she realised her mobile phone wasn’t in her bag. She knew she’d had her phone earlier that evening – because she had used it to make a phone call outside the bar. And she remembered putting it back in her bag before she went back inside.
Early the next morning, she rang her mobile phone insurance company to say that her phone had gone missing. She put in a claim under her policy.
The insurer turned down Miss R’s claim. It said that her policy excluded theft or loss of electronic equipment that was “left unattended when it is away from your home” – where “unattended” means “not within your sight at all times and out of your arm’s-length reach”.
The insurer told Miss R that, if her handbag had been where she said it was, they couldn’t see how someone had reached into it without her noticing. So they said it was impossible that someone could have stolen her phone unless it had been left “unattended”.
We looked carefully at the wording of Miss R’s policy. To be “unattended” in line with the definition in her policy, we took the view that Miss R’s phone would need to have been both out of arm’s-length reach and out of sight at the same time.
We thought that this definition was more restrictive than the everyday meaning of the word “unattended” – and unusual compared with similar policies on the market. Because of this, we would have expected the insurer to have pointed out the exclusion to Miss R.
We asked the insurer to send us all the documentation from around the time Miss R had taken the policy out. We could see no evidence that the insurer had drawn her attention to the exclusion when she took out the policy.
We also found no reason to doubt Miss R when she said that her bag had been between her feet the whole time she was in the bar. Even if that meant that her phone was out of her sight, it would still have been within her arm’s-length reach – albeit at a stretch. We reminded the insurer of our established approach – that if an item is next to a consumer, it can’t be said to be “unattended”.
We told the insurer to deal with the claim in line with the policy terms, adding 8% interest from the date of the theft to the date of the settlement. We also told them to pay Miss R £50 for the inconvenience she had been caused by their delay in handling the claim.
Mr J’s mobile phone contract was about to expire. He did some research and took out a new contract online – and got a new handset for free as part of the deal.
About eighteen months later, he noticed that £6.49 had been taken from his bank account each month along with his phone bill payment. When he went back over his statements, he realised that he had been paying that amount each month since the beginning of his phone contract.
Mr J got in touch with the company he had bought the package from to ask what was going on. He was told that the amount related to a mobile phone insurance premium – which would have been added automatically to his phone package at the time he bought it.
Mr J complained to the company. He said he had been paying for insurance he hadn’t asked for and didn’t even know he had. When he asked the company to repay the money it had taken, it refused. It said it had only been able to offer him such a competitive deal on his handset because of the insurance sold alongside it.
It also told him that after the first month of cover – which was free – Mr J could have cancelled the insurance at any point. Unhappy with this response, Mr J asked us to look into the situation.
We asked the company to provide a screen-shot of its website – as it would have appeared to Mr J when he was “checking out” online. This showed that the insurance had appeared in Mr J’s shopping basket with a notice underneath saying that it could be cancelled later on. But there had been no option for Mr J to remove it from the package he was buying.
We pointed out that the regulator’s rules on selling insurance say that a customer must be able to make “an informed decision about the arrangements proposed”. The rules also say that simply stating a customer’s cancellation rights isn’t enough. Businesses must still give the customer enough information to help them make an informed decision about whether to take out the insurance.
We told the company that by selling mobile phone insurance in the way it had, its customers – including Mr J – were not given any choice. All they could do was cancel the policy after they had taken it out.
The company then told us that Mr J should have noticed the premium on his bank statement. But we thought that £6.49 was a sufficiently small amount that it was understandable Mr J hadn’t noticed it among the other payments coming out of his account.
We also asked the company about its process for renewing its mobile phone insurance policies. We found that it didn’t send out notifications to its customers before renewal.
We felt it was unrealistic to expect customers to actively opt out of an insurance policy they had no option but to take out – without any reminder. We told the company to refund all the premiums Mr J had paid – adding 8% interest to each one.
One Saturday morning, Mrs D was sitting in her local café. She was chatting to a friend on her mobile phone. After the call, she put her phone in her handbag, which was under the table next to her feet. But when she got home, she found her phone was missing. Thinking it must have been taken from her bag, Mrs D immediately called the police and her network provider to report it as stolen.
But when she called her mobile phone insurance provider to make a claim, it refused to pay out. It said the policy did not provide cover for accidental loss – and would only cover the theft of a phone “if force, or the threat of force, had been used”. The insurer also told Mrs D that as she couldn’t prove her phone had been stolen, it was just as likely she had lost it – or left it “unattended”. Mrs D disagreed with the decision and referred the matter to us.
We asked the insurer to send us a copy of Mrs D’s policy documents. When we looked carefully at the wording, we found that the word “force” was not actually defined.
We usually say that “force” does not necessarily mean “violence”. For example, turning a handle and opening a closed door could constitute “forcible entry” to a property. So in our view, it would be reasonable to interpret the policy to mean that someone reaching into Mrs D’s handbag and removing her mobile phone amounted to the use of force.
We noted the insurer’s argument that Mrs D could have simply lost her phone – or left it unattended. But we didn’t think it had been fair of the insurer to reject the claim just because Mrs D couldn’t prove otherwise.
We thought it was plausible that a thief could have removed Mrs D’s phone from her bag without her noticing. And if her bag had been at her feet as she said, then the phone inside it hadn’t been left “unattended”.
Taking everything into account, we told the insurer to meet Mrs D’s claim in line with the policy terms – and to add 8% interest on any amount it paid out from the date her phone went missing to the date of the settlement.
One evening Mr H dropped his mobile phone into a bowl of washing up water. The phone stopped working straight away, and he contacted his insurance company to make a claim.
The insurance company asked Mr H to send them proof of purchase – so they could check that he owned the phone. They also asked him to send them the phone so that they could assess the damage. At first, Mr H couldn’t find his receipt. But two months later he found it and sent it to the insurer – who then agreed to consider his claim.
The insurance company noticed that Mr H hadn’t yet returned the phone, so they asked him again. But he said he no longer had it. He explained that he had asked his network provider whether the phone would be covered under the manufacturer’s guarantee. When the network provider told him that it wouldn’t, Mr H said had recycled the phone at a local charity shop.
The insurance company told Mr H that they would only replace a phone once they had established that it couldn’t be repaired. And because they had no way of doing so, they said they were not prepared to replace it. However, they said they were prepared to refund the premiums for the remaining six months on the policy, which Mr H had paid up front.
Mr H was unhappy with this response. He insisted that the insurer should replace the phone – and he made a complaint. When the insurer rejected his complaint, he referred the matter to us.
complaint not upheld
We noted that there had been nearly two months between Mr H making the claim and his finding the receipt. So we didn’t think the insurance company had contributed to Mr H’s decision to take other action in the meantime.
We noted that Mr H’s policy document had said that “if we are unable to repair your electronic item, a replacement item will be provided.”
We accepted that Mr H had been told by his network provider that his phone couldn’t be repaired under the manufacturer’s guarantee. However, we explained that this wasn’t the same as saying that his phone couldn’t be repaired at all. It just reflected the fact that manufacturers’ guarantees generally only cover faults – and not accidents.
We noted that Mr H had sent the insurance company photos of his water-damaged phone. And the company accepted that the situation was an accident – and was prepared to repair the phone under the policy. But without seeing the phone to assess the damage, we could understand why the insurer wouldn’t replace it. In the circumstances, we decided that their offer to refund Mr H’s premiums was fair – and we did not uphold the complaint.
Mr B had agreed that his daughter, Miss B, could have her own mobile phone when she started secondary school. Shortly before term began, he took out a mobile phone contract and mobile phone insurance online. He registered Miss B as an authorised user of the phone.
One afternoon, shortly after Miss B got off the school bus, she was approached by two older girls who forced her to hand over her phone. When she told her father what had happened, he reported the incident to the police and contacted the insurance company to make a claim. But the insurance company told him that the policy “excluded theft when the phone was in the possession of someone under 18 years of age”. Miss B was only 12, so the insurer wasn’t prepared to pay the claim.
Mr B complained. He said he hadn’t been made aware of the exclusion when he took out the insurance policy – and if he had been, he certainly wouldn’t have taken it out. When the insurer rejected his complaint, Mr B asked us to look into it.
We asked the insurer for a copy of the policy documents – and looked carefully at the exclusion the insurer had relied on when it refused to pay the claim. The exclusion said that there was “no cover for theft or damage if the phone was in the possession of any third party outside of the policyholder’s immediate family” – defined as “spouse, partner, parents, children, brothers and sisters (all over the age of 18) permanently residing at your address”.
Although this definition of the members of an “immediate family” wasn’t unusual, we thought that the age limit was significant enough that it should have been brought to Mr B’s attention when he took out the policy.
When we asked for evidence of how the policy was sold to Mr B, the insurer sent us screen-shots of the website he had bought it through. Under the heading “What am I covered for?” the website simply said: “This policy covers you for theft, accidental damage and mechanical breakdown”.
And the section listing the policy exclusions referred only to “immediate family” – with no mention of any age limit.
We eventually found the age limit in the very last section of a long document under the heading “important information”– which began with references to the Sales of Goods Act and other technical information.
We didn’t think it was reasonable to expect a consumer to have to read right to the end of a long document to find such a significant and unusual exclusion. We concluded that the insurer hadn’t brought the exclusion to Mr B’s attention as clearly as it should have done. And we didn’t think that Mr B would have taken out the policy if the insurer had made him aware of it.
In these circumstances, we told the insurer to consider the claim as if the exclusion did not apply – adding 8% interest from the date the phone was stolen to the date of the settlement.
Mrs M was getting her mobile phone out of her bag when she accidentally dropped it into a deep puddle. She knew straight away that her phone was damaged because the screen was blurred. She did her best to dry the phone out, but it still wouldn’t work.
Mrs M got in touch with her insurer to make a claim. The insurer accepted her claim and sent her a replacement phone. It also sent her a letter explaining that the handset was a refurbished one, and that it came with a three-month warranty. Mrs M set up the phone and started to use it.
Unfortunately, five months later the replacement phone stopped working properly. Mrs M emailed her insurer to see if they could help. But the insurer told Mrs M that she was “only entitled to one replacement phone a year”. They also told Mrs M that because she was claiming outside the new warranty period, they were not required to replace the phone.
Mrs M complained to the insurer. She pointed out that her replacement phone wasn’t working properly – and that it didn’t seem fair that she didn’t have a working phone when she had been paying for insurance. She asked the insurer to replace the phone. When they refused, Mrs M came to us.
We listened to both sides of the story and looked at Mrs M’s policy in more detail.
The policy clearly stated that any replacement phone would be of the “same age and condition” as the phone that was being replaced. So we were satisfied that the insurer had acted fairly when it had sent the refurbished phone to Mrs M.
However, we also noted that Mrs M’s original phone had come with a one-year warranty. She had only had the phone for five months when she dropped it – which meant that there were seven months left to run on the original warranty.
We could see from the insurer’s records that Mrs M had got in touch with them five months after she had received the replacement phone to say she was having problems with it. But the replacement phone had only come with a three-month warranty.
Mrs M’s policy said that any replacement phone had to be of the “same age and condition” as the original. We took the view that this should mean a like-for-like replacement. But the replacement phone had come with a shorter warranty, so we decided that it had not been truly like-for-like.
In these circumstances, we decided that Mrs M’s original claim had not been settled properly. So we told the insurer to supply Mrs M with a like-for-like replacement for her original phone.
Mr D phoned his insurance company to say that his mobile phone had been stolen. When he was asked how it had happened, Mr D explained that the phone had been “crashing” a lot. He said that he had been on his way to the shop to have it looked at when he was pushed against a railing by two youths – who snatched his phone and ran off. He said he went to the police station to report the incident.
The insurance company told Mr D it would need more information – and arranged for a claims assessor to visit him at home. A week later, Mr D received a letter from the company asking for some more documents – including a monthly statement for his mobile phone account.
Mr D was unhappy that he was being asked so many questions. He complained to the insurer, saying he didn’t understand why they wouldn’t just replace his phone. But when the insurer rejected his complaint, Mr D asked us to step in.
complaint not upheld
We asked the insurance company to show us the evidence it had used to make its decision. It sent us the report from its claims assessor – as well as a police report it had obtained with Mr D’s consent. We noted that the two accounts Mr D had given weren’t consistent with each other – for example, he told the claims assessor that he had been hurt badly by the attack, and gave a description of the youths. But he had told the police he hadn’t been assaulted – and couldn’t say what the youths looked like.
We asked the insurance company for more details about Mr D’s policy. We saw that he had made a successful claim for the same model of phone six months earlier – and that the phone he was now claiming for was the replacement he had been sent.
The insurer told us that it couldn’t understand why Mr D had taken the phone to the store rather than contacting the insurer directly – especially given how recently the insurer had sent Mr D the phone.
When the insurer asked Mr D to explain, he said he had phoned the store beforehand to confirm this was the best course of action. But he hadn’t been able to give the claims assessor the phone statement showing this call. And the store had no record of the call either.
We understood that Mr D had been upset by what had happened – and that he felt he was being asked for a lot of information. But in the circumstances, we could also understand why the insurance company would want to ask more questions before deciding to pay out. And we didn’t think the information it had asked for – for example, a phone statement – should have been particularly difficult for Mr D to provide.
We explained to Mr D that he needed to show it was more likely than not that things had happened as he had said. In the circumstances of this particular case, we did not think the insurer had acted unfairly – and we did not uphold the complaint.
Mr J lived in a ground-floor flat. One night he was asleep in bed with his window slightly open. He was terrified when he woke up and saw an intruder in his bedroom.
The intruder grabbed Mr J’s mobile phone from the top of his chest of drawers and escaped through the window.
Mr J phoned the police straight away to report the crime. The next morning he phoned his insurer. He spoke to an adviser on the insurer’s claims helpline and explained what had happened.
A few days later he received a letter telling him that he wasn’t covered – and that his phone couldn’t be replaced. The letter said that Mr J’s policy only covered him for theft “if force that resulted in damage to the premises was used to enter or leave the building”.
Mr J phoned the insurer to complain. He said he couldn’t believe that they were refusing to cover him when someone had actually broken into his house and stolen his phone.
But the insurer wrote to Mr J saying that: “as no damage had occurred to show forced entry, the building was not secured”. The letter also pointed out that by leaving a window open – whether Mr J had been at home or not – “the risk of theft was great enough that the theft was not covered as an insured event”.
Mr J was still very unhappy, so be brought his complaint to us.
We looked at the police report from the incident – and we noted that the police did not dispute Mr J’s account of what had happened. The report said that Mr J’s window had been slightly ajar, and that the intruder had pushed the window further open so he could climb through.
Once we had satisfied ourselves that the theft had happened in the way that Mr J had described to the insurer, we had to decide whether the insurer had acted fairly in deciding that it was “not an insured event”.
The policy exclusion the insurer had relied on appeared to us to be designed to protect the insurer where a consumer had been careless – by, for example, leaving windows open while they were out, or by leaving doors unlocked.
At the time Mr J‘s phone was taken, both his front and back doors had been locked. The only window that had been open was his bedroom window. So we decided that Mr J had taken steps to secure his home, and we did not think it had been careless of him to leave his bedroom window slightly open.
We accepted that no damage had been done when the intruder had entered and left Mr J’s flat. However, we decided that that by opening Mr J’s window further than he himself had opened it, the intruder had used a degree of force to enter Mr J’s property.
Taking everything into account, we decided that the insurer had not acted fairly in the circumstances of this case. We told them to reconsider Mr J’s claim – and to pay him £50 to make up for the inconvenience it had caused him.
Ms W caught the train to Manchester to do some shopping. While she was looking around in a department store, she decided to phone her sister to discuss ideas for a present for their mother. But when she looked in her bag for her phone, it wasn’t there.
The last place she remembered having her phone was on the train. She had called her partner from the train and she hadn’t used her phone since then. So she thought she must have left it on the train.
Ms W asked a sales assistant in the department store if she could use their phone. She phoned the lost property office at the train station she’d arrived into – to ask whether her phone had been handed in. Unfortunately it hadn’t. She also phoned her network provider to ask them to lock down her number.
The next day Ms W phoned her insurer to explain what had happened – and to put in a claim. The insurer told her that she needed to report the loss to the police so she could get a loss reference number to support her claim. Ms W did what the insurer had asked her to do.
But when the insurer assessed Ms W’s claim, they turned it down. The insurer said that her policy “did not cover lost items that were left unattended in public places”. They said that because the phone was left on a train “and not in a place that was inaccessible to the public, the subsequent loss or theft of the phone was not covered”.
Ms W thought this was nonsense. She complained to the insurer, saying that she’d taken out that particular policy because it would cover her if she lost her phone. When the insurer rejected her complaint, Ms W asked us to look into it.
We asked both the insurer and Ms W to send us copies of all the information they could.
When we looked through the policy, we noted that there were some inconsistencies between the wording in the terms and conditions, and the wording in the FAQs document and the summary booklet. The terms and conditions of the policy specifically excluded cover “for items lost while unattended in a public place”. Whereas the summary booklet said “don’t worry if you lose your phone” and the FAQ document said that loss would be covered – where “loss” meant an item being “left in a public place or a place that people you don’t know can easily access.”
We took the view that the supporting documentation was there to provide a more user-friendly format than the terms and conditions document. Although the documents might have been worded slightly differently, we took the view that they should have been consistent in what they said.
In this situation, we could understand why Ms W had thought that she was covered for losing her phone if the supporting documents said so.
We also considered the insurer’s point about Ms W’s phone being “unattended”. We thought that the phone was only “unattended” because it was lost. After all, Ms W had not left her phone on the train deliberately.
We concluded that because Ms W had bought the policy in good faith, thinking it would cover her if she lost her phone. So it seemed unreasonable for the insurer to turn down her claim.
In these circumstances, we told the insurer to deal with Ms W’s claim.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.