Are you decently covered?

I was staying in a hotel recently and before going down for dinner I added up the value of the various gadgets I was leaving in the room. These consisted of the inevitable iPhone, plus an iPad, Kindle reader, laptop and an SLR digital camera and flash. It struck me how right recent estimates are that we regularly carry around £3,000 worth of electronic gadgets and jewellery without a second thought about the value – and rarely know whether or not they are insured.

One of the reasons is that the insurance industry has changed, with the arrival of comparison websites. In the past we had face-to-face conversations with brokers about what was and was not insured. Now many of us simply go online and click to buy the best deal for house cover and contents. We then assume, without reading the small print, that we’re buying the same cover we had before, but at a cheaper prices.

One of the problems, in that it triggers complaints to the ombudsman, is cover for contents or possessions outside the home. This is one of the areas where cover has been trimmed back or even excluded to make premiums more competitive. If we’re travelling overseas the same can apply with travel insurance. Again we buy online, focusing on medical and cancellation cover, but not looking at the limits on individual items, excesses or the security we have to take with electronic gadgets, cash and jewellery to ensure they’re covered.

In broad terms, the financial ombudsman for the insurance industry is suggesting most people are unaware of the value of what they carry around, and have taken few, if any, steps to make sure it is fully insured outside the home – which is, of course, where we want to use mobile gadgets.

It comes down to two choices. One is specialist gadget insurance, which can be bought online and provides fairly broad cover from accidental damage to theft inside and outside the home. With this it is important to read the small print. There have been many reports of companies making it all but impossible to claim, on the basis of rules about the precautions you must take against theft, or how the accidental damage is caused. Beware too if this insurance comes as part of a packaged premium bank account, as these often restrict cover to keep the price down.

Another problem is that many travel insurance policies – whether single trip, or annual policy – have not increased cover for personal items over the years. You may find the limit for any single item is well below the price of a tablet computer, the latest iPhone or similar smartphone. The general advice with travel and gadget policies is that the cheapest is not always the best, and that the time to read the small print is before you buy, not when a claim has been rejected or trimmed back well below the value of what was lost – with the added insult of a big excess on the claim.

The second, easiest and generally most convenient way to secure cover is to add gadgets and other possessions onto a normal household policy, making clear that you want to cover these outside the home. Some companies have a simple add-on schedule to cover gadgets, but be aware that this may well add 20% plus to the basic policy for good cover.

Remember too that excesses have risen over the years on many household policies, and that if you do make a claim it might affect your no claims discount, or limit your scope to test the market when the policy is up for renewal.

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