05 Dec 2017 | 12.03 pm
Gadget Insurance Is A Mystery To Most
Many buyers find policy terms unfair
05 Dec 2017 | 12.03 pm
Gadget insurance is a mystery to most consumers, according to research carried out by the Central Bank’s consumer protection division, as the majority surveyed “did not understand what was covered” and many could be paying for insurance they do not actually need.
The CBI report, Consumer Experience of Purchasing Gadget Insurance, was undertaken to examine consumers’ attitudes, behaviours and experiences when buying insurance for gadgets such as smartphones and tablets. The research also sought to understand the impact of any possible behavioural biases and identify risks in this area.
The research found that:
- The majority of consumers did not understand their cover and thought it covered more than it did, and some consumers may be paying for cover they do not need.
- Most consumers did not plan to buy gadget insurance until it was sold to them as an add-on at the point of sale.
- A significant majority of participants in the focus groups, who mostly bought in-store, stated that the gadget insurance was sold to them as part of an add-on purchase when buying a gadget, usually a smartphone or a laptop, with most purchases based on verbal explanations of retail staff.
- Participants often justified their decision to purchase gadget insurance by assuming it covered the ‘basics’, such as general repair/replacement and screen fixing at no extra cost.
- Few seemed familiar with the details of the exclusions and excess related to the policy, the report says. Some deemed certain policy terms to be unfair — such as the excess costing more than the repairs, application of waiting periods, no cover for under 18s and restrictions on the age of the gadget and the place of purchase.
- The research also found that participants were unfamiliar with requirements to report incidents to Gardaí, and requirements to report such incidents to Gardaí within specified time limits.
The survey found that 29% reported unawareness of the requirement to report theft/loss to the Gardaí; 45% expected ‘wear and tear’ to be covered; and 77% expected to be offered a new device in the event of a device needing to be replaced.
The report also found that 12% of the adult population (440,000 consumers) held gadget insurance at the time and as many as 24% were likely to have held it within the past two years; and 21% of respondents failed to cancel previous policies after taking out a new policy — in doing so, they were paying for cover they no longer needed.
Director-general financial conduct Derville Rowland said: “Phones, laptops, tablets and other gadgets form part and parcel of our everyday lives, and a significant proportion of the population hold insurance on these devices.
“The firms which develop and sell these insurance policies have a regulatory responsibility to ensure that the products are properly designed to meet the needs of the consumers they are sold to, and that they are sold in a fair and transparent manner. Firms are reminded of the requirement to have strong product oversight and governance arrangements in place for the manufacture and distribution of these insurance products, in order to ensure that the best interests of consumers are protected.
“Given that the research also highlighted misunderstanding of policy cover, consumers who may be considering purchasing gadget insurance over the festive period may wish to consider the types of exclusions and excesses highlighted in this research, to see if they are included in their policy, and to determine if the cover they are offered meets their needs.”