Dosh dilemma – I lost my phone and my insurer won’t pay out - what are my rights?

David’s been paying £10 a month for mobile phone insurance for years without ever making a claim.

But last month, while on his way home from work, he accidentally left his phone on the bus. When he contacted his insurer to make a claim, they refused.

David’s feeling frustrated and confused and wants to know: does he have any rights to contest the insurer’s decision?

We’re sorry to hear about your situation, David, losing your phone is a nightmare, without the stress of a battle with an insurer.

We hope the following information helps:

What does phone insurance cover?

Mobile phone insurance is there to protect you against common issues. There are different levels of cover, but most policies include:

• Accidental damage: if you accidentally damage your phone, like cracking the screen, your insurer will cover the repairs or replacement.
• Theft: if your phone’s stolen, your cover will replace it with the same make and model, or one of similar specifications.  
• Loss - if you lose your phone, some policies will replace it with a similar model. But, often this is an optional extra and you’ll need to pay a higher premium.
• Mechanical breakdown – if your phone breaks down or stops working when it’s out of warranty, you’ll be covered.

Check your policy documents

So the first thing you should do is check your policy carefully to see if the reason for your claim being rejected matches the facts.

If loss is covered in your policy, you’re in a better position to contest the decision. However, if loss was an optional add-on and you didn’t pay extra for it, that could explain the refusal.

‘Reasonable care’

Some policies won’t cover loss or theft if you didn’t take proper care of your phone, which could apply to your situation.

Many policies include a ‘reasonable care’ or ‘duty of care’ clause, meaning you must take steps to prevent loss or theft. Since you left your phone on the bus, the insurer might argue that you didn’t take enough care, which could be why they’re refusing to pay out.

Challenge the decision

If you feel the refusal is unfair, you have the right to challenge it. Sometimes, these decisions can be overturned.

Here’s what you should do:

Check you’ve given all the right details - make sure you haven’t missed anything when making your claim.

Review the wording of the policy - look for any unclear or ambiguous terms. Insurers must provide clear information and if their refusal is based on vague language, that might be grounds to contest.

Contact your insurer - reach out to them, giving full details of your complaint and why you believe the decision is wrong.

If you’re not satisfied with their response, you can escalate the issue by following the insurer’s formal complaints process.

Use the Financial Ombudsman Service

If you’re still unhappy after following the insurer's complaints procedure, you can take your case to the Financial Ombudsman Service.

This independent, free service investigates complaints about financial companies, including insurers.

The Ombudsman will review both sides of the story, look at your documents and try to find a fair outcome based on the facts and common sense.

You can only approach the Financial Ombudsman after you’ve received a ‘final response’ from your insurer or if eight weeks have passed without a response.

If the Ombudsman agrees your claim was wrongly rejected, they can make the insurer:

• explain its actions
• apologise
• pay compensation or take appropriate steps to change the outcome.

You can file a complaint on the Financial Ombudsman Service website.

Is your mobile covered by home insurance?

It’s also worth checking if your mobile is covered by your home insurance. Some home insurance policies include coverage for loss, theft and damage to mobile phones, so it’s worth a look.

Is mobile insurance good value? 

Finally, it’s always worth considering if your mobile insurance is actually good value. Always check exactly what you’re getting and whether it fits your needs.

For example, if you need a fast replacement phone, make sure your policy covers that.

Shop around

Also, be mindful when buying a new phone or contract. You might be offered mobile insurance, but shop around first, as you could find a better deal elsewhere.

We hope this helps, David, and good luck with the complaint.