Gadget insurance claims rocket as Ombudsman steps in

New data has revealed that the number of complaints about gadget insurance policies has doubled in the last year.

The Financial Ombudsman Service (FOS) says it saw 2,200 complaints about gadget warranties last year and has been forced to intervene in hundreds of cases where insurers have turned down claims.

If you have an mp3 player, mobile phone or laptop computer then you have probably considered insuring these devices. But is gadget insurance really worthwhile? And shouldn’t your home insurance cover these items? Keep reading to find out more.

Gadget insurance claims double in last year

Millions of people carry expensive devices such as mobile phones, portable game consoles, netbooks, laptops and mp3 players with them every day. The value of these items can run into thousands of pounds: indeed the Ombudsman’s office recently asked its own staff to estimate the cost of replacing the items they were carrying and found that in some cases this was £3,000 or more.

So, it’s no surprise that consumers want to ensure these valuable items are protected. However, research from the FOS says that the number of gadget insurance complaints has doubled in the last year. It says that many people hugely undervalue the cost of the handheld devices that they carry with them, and are also unaware that most general insurance does not cover items outside the home.

If you have contents insurance on your home then you may believe that your items are covered. However, unless you have specifically added ‘contents away from the home’ cover to your policy then you may not be protected if you lose your phone or your devices are stolen.

Claims routinely being declined unfairly

Many thousands of people have taken out dedicated gadget insurance in order to protect their valuable items. However, the FOS says that claims under these policies are routinely being declined and that it has been forced to step in on behalf of consumers. It says it intervened in 800 cases where claims were turned down, and in 43 per cent of them found in favour of the claimant.

The FOS report points out that gadget insurance should cover specific electronic devices against damage, including the effects of water or liquids, theft, and loss at home or when you are out and about.

However, it also said: "We see an array of complaints about gadget insurance - the two most common resulting from a claim after the device was stolen or accidentally damaged. If an insurer turns down a claim on the basis that it was left unattended, or - in the case of damage - that it was caused deliberately, some insurers [then] reject complaints.”

The FOS report that there were hundreds of cases where terms in the contract had been applied unfairly, or that they were so ambiguous it was hard to see how anyone could make a successful claim.

The BBC reports that ‘in one example, a person had his tablet computer stolen from a locked suitcase in a locked room while he was on holiday. The insurer declined the claim as there was no evidence of forcible or violent entry into the hotel room where he was staying, as required by the terms of the policy. The Ombudsman did not consider this fair.’

Tips for making sure your gadgets are covered 

• Check your home insurance policy. Does it include ‘cover away from the home’? If so, is there an excess or a maximum claim?
• Read the guarantee from the manufacturer or retailer. Does this cover you?
• If you bought your item using a credit card, is your gadget covered under the insurance provided by your card issuer?
• Does your insurance cover older items? Some will not insure items more than six months old