Smartphone Insurance: what you need to know

15 July 2015

A smartphone can be an expensive investment. When you take into account its value, how often you'll use it, how easy it is to steal and how relatively fragile it is; owning a phone can be kinda stressful.

However, if you buy your phone through one of the major providers there are options for protecting your device (and your wallet) against many of these unfortunate events. All of the big carriers offer phone insurance, either as an add-on to your monthly plan cost when you sign up, or to be bought separately if you decide you'll need it down the track.

If you're serious about protecting your phone, you may want to consider just what is covered by retail and manufacturer's warranties, and the rights you have as a consumer under Australian consumer and fair trading laws.

Telstra StayConnected Plus

Telstra's insurance program is known as StayConnected Plus and comes with a raft of protection features as well as the standard damaged handset replacement policy.

You can choose to get access to a personal data backup service and a system which can deactivate a lost or stolen handset (though there are free services from Apple and Google which offer the same).

  • Monthly Premium: $13.00.
  • Up to 2 handset replacements within a 12-month period.
  • A service charge of either $140, $190 or $220 must be paid for each replacement (costs vary per device).
  • Access to a Data Backup and Restore service hosted by Telstra
  • Access to Mobile Technical Support Services
  • Customers must be on a valid plan and have no overdue fees when requesting a replacement.
  • Service can be cancelled at any time.

Optus Device Protect

Optus offers two different insurance options for its customers, standard insurance for cheaper phones and Smart insurance for premium priced smartphones.

1. Standard Insurance

  • Monthly premium: $14.00
  • Along with theft, loss or accidental damage, Device Protect also covers electronic breakdown or failure.
  • Applies overseas as well as locally.
  • The electronic breakdown option can be claimed up to one year after the manufacturer’s warranty expires.
  • Covers for up to $2000 for your device and $600 in unauthorised phone calls.
  • Cover also includes all associated accessories.
  • There is a general excess of $100 for repairs and $200 for replacement for smartphones.

Optus Mobile Insurance is only available when purchasing a new mobile from Optus and is provided by Optus Insurance Services Pty Limited.

Vodafone Cover Me

Vodafone also provides its own smartphone insurance, Vodafone Cover me Mobile Insurance, through ACE Insurance Limited.

  • Monthly premium: $15.00.
  • Provides cover for both phones and tablets.
  • Will replace or repair a device if it is lost, stolen or accidentally damaged, up to 3 times per year.
  • Insures up to the value of $1700, plus $100 towards damaged accessories bought with your device.
  • Includes reimbursement of up to $500 of unauthorised call costs in the event of theft or accidental loss.
  • Up to $300 towards hiring or temporarily replacing a device when overseas.
  • For an iPhone and most smartphones, the excess payable is $225 for to replace your phone with a new model, ($125 for 'standard' devices), and $300 if the claim is made within the first 90 days of your policy.

Cover with Vodafone applies equally both here and overseas. Subject to availability,Vodafone may provide customers with a temporary phone if theirs is required to be sent away for repairs (unfortunately the same benefit doesn't apply to tablets).

Virgin Mobile Insurance

Virgin Mobile’s mobile phone insurance is offered through Risk Insure Pty Ltd.

  • Monthly premium: $9.95.
  • Covers repairs or replacement of a phone if it is lost, stolen or damaged.
  • Will insure for up to $5000 per claim.
  • Reimbursement of up to $1250 or unauthorised calls if the phone is lost or stolen.
  • Provides up to $500 per claim to hire an equivalent temporary replacement if overseas.
  • Applies both here and overseas.
  • $200 excess for iPhones, $125 for any other smartphone.

iPhone Warranties Provided by Apple

Although not all insurance options cover malfunction and breakdown, Apple offers its own warranty options for customers to cover technical problems and defects.

Apple includes a one-year warranty for the phone itself and any Apple accessories contained in the original packaging. The warranty covers any defects in materials and workmanship, provided the product is used 'normally and in accordance with Apple’s guidelines'.

Apple also gives its customers the option of the AppleCare Protection Plan at an additional cost. This gives customers an extra year of warranty, with telephone technical support for two years, an express replacement service for damaged iPhones and access to overseas repair or replacement.

AppleCare Protection can be purchased any time within the one year warranty period, and for iPhones it includes :

  • Protection for damages and defects for the phone itself, its battery and included Apple accessories
  • Software support for iOS and Apple-branded applications (Mail, Safari, iTunes, etc)
  • For frequent travellers, it also provides the handy option of global repair coverage through Apple retail stores or authorised technicians.

The main differences you need to remember between the warranty Apple provides customers and insurance bought through your carrier:

  • Apple’s warranty covers breakdown, mechanical failure and manufacturing errors and defects. It does not assist customers if their device is stolen, lost or for any damage caused by accident or external causes such as liquid contact, fire, or misuse.
  • Insurance offered by providers usually doesn’t include electrical or mechanical breakdown (although Optus gives customers this option). It does cover your phone being lost or stolen, and any accidental, unforeseen damage. Policies that do cover breakdown or failure apply only to repairs that aren't covered by a manufacturer’s warranty or guarantee.

So while a manufacturer’s warranty is best for covering product failure and electrical and mechanical problems, it won’t help you if you drop your phone, or mistakenly sit in a full glass of water (it happens). And although insurance is invaluable if your phone is stolen, it may not give you appropriate cover if your phone’s software dies three months after your purchase.

Australian Consumer Law and your rights

A customer’s rights and abilities to seek reparations for faulty products are covered in Australia by the Australian Consumer Law, which covers all states and territories and regulates fair trading and consumer protection.

What consumers need to know is that warranties issued by manufacturers do not restrict a customer's rights - they don't override or limit the Australian Consumer Law, and just because your warranty has expired or a fault isn't covered by the manufacturer, doesn't necessarily mean you're not entitled to assistance or compensation from a retailer under Australian legislation.

The law states that:
  • Consumers have the right to ask for a repair, replacement or refund for goods that are faulty, unsafe, look unacceptable or don't work the way that they're supposed to.
  • Australian consumers are entitled to a refund or replacement for a major failure and compensation for any other reasonably unexpected loss or damage.
  • Consumers are also entitled to have goods repaired or replaced if they are not of acceptable quality, even if there is no major failure.
  • For minor issues, businesses may choose whether to repair, refund or replace the faulty item, and any repairs must happen within a 'reasonable time frame'.
  • For major problems, consumers are given the choice between a replacement or a full refund.

Phone manufacturers and telco providers must ensure the goods they sell are fit for purpose, match the description provided and any sample or demonstration models, and have the same qualities and level of performance that have been advertised or promised by the seller.

However, there is a downside - phone manufacturers do not have to provide a refund or replacement if the customer doesn't have proof of purchase, has simply changed their mind, if they themselves have caused damage (intentionally or through obvious neglect), or the customer was aware of a fault prior to making the purchase. They may do so in a show of goodwill, but there is no legal requirement.

So to sum it all up, it's important that you don't rush into a purchase without comparing and understanding fully what it is you'll be buying. You should be aware of the likely circumstances in which you'll need repairs or assistance from your retailer or provider, and check you have adequate protection, either through your warranty or through additional insurance. One last thing that may save you a lot of hassle down the line - make sure you keep your receipts!

Smashed Phone image via Shutterstock

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