Mobile phone insurance – must-have or rip-off?

Smartphone insurance is expensive and in many cases the insurer doesn’t pay out. Here’s a few things you need to know


3 minute read


Mobile phone insurance policies typically cover incidents like accidental damage caused by dropping, liquids, and power surges from lightning. There are, however, considerable differences between policies, and the list of exceptions is long.

What’s covered by mobile phone insurance?

Breaks and cracked screens are one of the most common types of damage and are covered by the majority of phone insurance policies. Liquid damage has also become standard in many policies. But insurers do closely scrutinise such claims. For example, if you take your smartphone to the swimming pool or bathroom and it falls into the water, you might not receive reimbursement. The same applies if you spill a drink on your phone. In some cases, the insurance only covers damage from mains water due to a burst pipe, which is extremely rare.

Power surge damage is usually included. This means you could be covered if your phone is connected to the power during a thunderstorm and a lightning strike overloads and breaks your device.

If your mobile phone is stolen from you by violent means, the insurance company should pay out. But with ordinary pickpocketing, it’s a different story. This type of theft is only included in more expensive policies. And even then, the insurer will only pay out if you are deemed to have taken ‘reasonable care’ (see below).

What does the insurance not cover you for?

As a rule, customers will only receive a replacement phone if they are no longer able to use their device. Scratched screens and cracked cases are not considered sufficient for a replacement. Ordinary wear and tear is not covered.

Maybe people assume that mobile phone insurance will pay out in the event of theft. However, this is not always true. Some insurers only pay if you keep your mobile phone under constant supervision and within arm’s reach. So if your phone is in your bag, the outside pocket of your coat or in an unlocked changing room, the insurer could reject the claim. Even leaving your phone unattended for a quick toilet break could spoil your hopes of reimbursement. Basically, you are only insured if you take every precaution to prevent a theft.

If your phone is infected with a virus or damaged by rain, you will usually have to pay for the damage yourself.

Will the insurance company give me a new mobile phone?

In the event of damage, the insurance company will first try to get your mobile phone fully functional again (and will bear the costs for this). So the first step is a repair. The device will only be replaced if it is impossible or unfeasible to repair it. The insurance company may provide you with an equivalent device or, in some cases, a used or refurbished device.

Mobile phone insurance policies are almost always based on replacement cost. This means that the insurer will reimburse you the current market value of the phone, not the purchase price. After just one year, the market value of a mobile phone usually drops to between 50 and 80 percent of the purchase price. Policies are often arranged so that the insurer would reimburse the purchase cost for claims made within the first months, but later only the actual market value.

When do warranties, manufacturer's guarantees and other insurances apply?

In the EU, a mandatory legal warranty applies. In Germany and the majority of EU countries, this is two years for new products. If a defect occurs in the first six months after delivery of the goods, it is assumed that the defect already existed at the time of delivery. After this period, it is up to you to prove that the defect was already there before. In addition, many manufacturers offer a voluntary guarantee on individual parts or the entire device for a certain period of time. So even without mobile phone insurance, you will not necessarily be left with all the costs.

Sometimes, personal liability or home contents insurance come into play. For example, if another person damages your mobile phone, their liability insurance will cover it. Home contents insurance pays out if your phone is stolen during a break-in or if it is damaged or destroyed in a fire. Damage caused by escape of water (e.g. burst pipes, leaks) or flooding is also covered by home contents insurance.

How expensive is mobile phone insurance?

The price of mobile phone insurance usually depends on the purchase price of the phone – the more expensive the phone, the more expensive the insurance. You can expect to pay an annual premium of around 10 to 20 percent of the new device price with a minimum term of two years. This makes mobile phone insurance expensive in comparison to other types of insurance. If, for example, you purchased a new smartphone for 1,000 euros, insuring it could cost up to 200 euros per year.

Many insurance companies also offer deductibles, which lower the insurance premium. However, if you make a claim, you will have to pay a certain amount yourself. This can be either a fixed sum or a variable proportion defined as a percentage of the new price.

Do not buy insurance in the phone shop

Retailers often offer smartphone insurance when making sales in store. However, consumer protection agencies advise against quick decisions. It’s often the smallprint that matters, and it makes sense to compare prices online. Don’t let yourself be pressured and make sure you read the insurance conditions in your own time.

Our verdict: Mobile phone insurance only makes sense in a few cases

Many people can no longer imagine a life without their smartphone. However, few people actually require an instant replacement if they lose their phone.

For this reason, mobile phone insurance only makes sense for expensive, high-end smartphones – especially if you do not have a regular income and cannot easily buy a new phone. Even if you’re someone who always has the latest model from the top brands (with purchase prices around €1,000+) and you purchase a new phone every two years or so, it’s worth thinking about it.

For everyone else, calculate how much the insurance company would pay out in case of damage in one or two years. You should take into account the purchase price of the device, the sum of the premiums paid up to that point, any deductibles you may have in your policy and the depreciation of the device. The cheaper the new smartphone, the less worthwhile it is to have your own insurance.

Author: Lydia