But insurers still rejecting initial claims too hastily

The number of complaints about mobile phone insurance has dropped by 21%, according to the latest figures from the Financial Ombudsman Service (FOS).

So far this financial year – April to November – the FOS has tackled 343 new mobile phone insurance complaints compared with 433 in the same period last year.

But the latest FOS figures also show that three out of four complaints were upheld in favour of the consumer between April and September, compared with only 70% in the previous six months, suggesting insurers are still rejecting initial claims too hastily.

The FOS said the most common complaint themes continue to be the result of a lack of suitability for the consumer’s needs and product mis-selling by insurers. Restrictive terms and conditions and lack of consumer awareness about when and what consumers will be covered for were also common complaints.

Mobile insurance worse than PPI

Mobile phone insurance came under the spotlight from the FOS and the FCA last year after it was revealed that more than 90% of consumer complaints about mobile phone insurance claims were upheld in the consumers’ favour. This figure was higher even than for PPI complaints.

FOS lead ombudsman Caroline Mitchell said: “We found a big disparity between consumers’ general expectations, and the cover that their mobile phone policy actually provided – or the way their insurer had applied their policy terms when they made a claim.

“Generally speaking, there are only three reasons you would want cover for your phone: loss, theft or damage. We were seeing complaints from people whose phone had been stolen, but their claim had been rejected because there hadn’t been any physical violence involved. We saw claims for stolen phones that had been rejected because the consumer hadn’t witnessed the theft.”

The FCA conducted a probe into the mobile insurance market and released its findings in June this year.

It said that some products were not designed to meet customer needs, descriptions of what is covered were too broad and ambiguous, and that policies that promised to cover loss did not cover instances where a customer accidentally left their phone somewhere.

The FCA also found examples of poor claims and complaints handling and fined one firm – Policy Administration Services – £2,834,700 for poor complaints handling of mobile phone insurance policies.