The insurance industry may feel a little picked on lately as two issues regarding insurance for cellular handsets have reared their ugly heads simultaneously.
In Florida, a class-action lawsuit has been filed, charging the insurance industry with deceptive practices in its coverage of wireless handsets. That lawsuit was brought by Maria Prohias and Carlos Perez against the three main companies that offer cellular handset insurance: The Signal Co. (underwritten by Assurant Group), Lock/Lines (underwritten by Continental Insurance Co.) and Asurion Corp. (underwritten by Hartford Insurance Co.)
Basically the gist of the lawsuit is that the insurance companies charge up to $5 per month for people to insure handsets that aren’t all that valuable, and then force customers to pay a deductible for replacement phones. The lawsuit also complains that these replacement phones are often refurbished instead of new.
At least two of the insurance companies said there is no basis for the lawsuit.
Meanwhile, across the pond, the British Insurance Brokers Association is telling people that mobile-phone insurance can be expensive, and people may be better off to not insure cheaper handsets or insure expensive handsets under home contents insurance policies, even though that brings on an entire new bunch of problems.
“Many policies say that if the owner leaves their phone unattended in a public place and it is stolen or damaged then the provider can refuse replacement or payout,” the association said. “Also, some policies stipulate that `airtime abuse’ must be reported within 24 hours otherwise they can refuse to cover the costs.”
If a customer buys a handset for $50, it doesn’t make a lot of sense to pay an extra $5 a month for insurance. ($5 a month for 12 months equals $60.) If you have expensive handset and a proclivity to lose things, it may be a different story.
Some people get a certain amount of comfort out of buying service plans when they buy major appliances, TVs and automobiles. Others (I fall into this category) are leery of them and think they are just another way to get more money from the customer.
I suspect cell-phone insurance is much like the service plans offered for major purchases: the buyer should know what he or she is actually buying. At a time when wireless carriers are under attack from local and state governments for allegedly mistreating customers in a variety of ways, some straight talk on the benefits vs. risk of handset insurance likely is worthwhile. But I would still argue people usually are aware of what they are buying.
