Business Personal Finance

Sunday 25 August 2019

Your money: Is it the best policy to take out bicycle and gadget insurance?

Separate cover for expensive individual items can make sense, but read the small print, writes John Cradden

In the relatively short time it has been in existence, the gadget insurance market has come under scrutiny. Stock photo
In the relatively short time it has been in existence, the gadget insurance market has come under scrutiny. Stock photo

John Cradden

It is a reflection of the evolving insurance market that there is such a thing as 'gadget insurance' - stand-alone policies that specifically cover high-tech mobile devices, such as smartphones, tablets, e-readers, digital cameras, smart watches, sat-nav systems and laptops. Such devices have traditionally been insured under home insurance policies (if at all).

However, there are lots of limitations and conditions that have many people seeking out specialist cover for smartphones - which can easily cost €1,000 or more but can just as easily be swiftly swiped by a cunning thief or smashed to smithereens on a hard-tiled floor.

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While your regular house insurance policy covers 'contents' in your home, many carry a 'per-item' limit, which might be just €750, or curtail that cover once items are taken out of the house.

That is not much use for your devices, many of which could be specifically excluded, or may need an 'all-risks' or 'specified possessions' listing on your plan, carrying a hefty extra premium.

The same is true for bicycles. Most bicycles can be covered under household policies to some degree.

But with the booming sales of high-end bicycles that are too expensive to be fully covered by household policies, there are more firms insuring bikes on a stand-alone basis today, including one dedicated cycle insurer.

So which type of policy is better for your expensive high-tech gadgets or your beloved bike? Do they represent good value or are you just over-insuring yourself?

Gadgets

Compared with the potential losses, the prices of many gadget policies look attractive, such as from Chill.ie, Blueinsurance.ie and mobile operators like Three and Vodafone, plus retailers such as Carphone Warehouse. You can also get cheap cover if you are a credit union member, through a scheme called CUSafe. Some premiums start at less than €8 a month for a top-of-the-range Samsung Galaxy S9, or €12 a month for an Apple Macbook Pro laptop, which typically cover accidental damage, liquid damage, loss and theft anywhere in the world.

You might even get cover for any unauthorised calls a thief makes on your smartphone, and if a device breaks down.

However, in the relatively short time it has been in existence, the gadget insurance market has come under scrutiny, particularly for the manner in which many retailers sell the financial product as an 'add-on' when consumers are buying their devices at the point of sale.

This is how gadget insurance is mostly sold. Yet the problem for consumers with this, according to an ESRI study, is that they are far more focused on assessing and buying the gadget than an insurance product, meaning that they cannot ultimately make a balanced and informed decision about it.

Indeed, consumers often end up agreeing to buy insurance in these situations because of 'decision fatigue'.

This was one of a number of issues in the gadget insurance market flagged by the Central Bank last November. As part of a number of themed investigations it carries out on the sale of specific financial products, it looked at gadget insurance by conducting on-site inspections at three firms that together accounted for 80pc of this market.

Besides the 'hard-sell' issue, the study revealed that the majority of consumers did not understand their cover and thought it covered more than it did; that some consumers may be paying for cover they do not need; and that few were familiar with the details of the exclusions and excess related to the policy.

In addition, consumers judged certain policy terms to be unfair, such as the excess costing more than the repairs; the application of waiting periods; no cover for under-18s; and restrictions on the age of the gadget and the place of purchase.

There are others who were never told that some gadget insurance policies can run for as long as five years unless cancelled by the policyholder and, as a result, they continue to pay premiums for items they no longer own or have any use for. Indeed, 21pc of consumers do not cancel existing policies after taking out a new one.

There is also a lack of awareness of what needs to be done before you make a claim, which means that many people who have legitimate claims lose out as they do not take the right steps in the allotted time.

Others are disappointed when they realise they are not automatically entitled to a new device if something happens to an existing one.

All this is not to say that gadget insurance is a bad thing, particularly with an impressive claims acceptance rate of more than 90pc. But consumers clearly need to do their research. "My advice to customers is to read their policy terms and conditions, to find out what they're covered for," says Daragh Cassidy of price comparison site Bonkers.ie.

"If you're in any way unsure, contact the insurance company and ask if you're covered. If not, ask how much it would cost you to get cover. Be honest, and explain how much the item is and where you intend using it."

If you have more than one gadget that you would like to cover, the Competition and Consumer Protection Commission recommends taking out a multi-cover policy.

It also suggests that you take out insurance for two years (rather than five), as many electronic gadgets fall in value very quickly, and to cancel any existing policy on an old gadget, or else inform the insurer when you have bought a new one so that it is insured.

Bicycles

The numbers cycling to work or partaking in cycling-related activities or sport have been rising sharply for the past few years, which in turn has boosted sales of bikes of all types, particularly at the upper end of the scale.

But the rise in the population of bicycles has been accompanied by a jump in the rates of theft, with 4,000 bike thefts reported last year in Dublin alone. Campaigners say the true figure may be three times higher because of the numbers that are not reported.

Insuring a bicycle under the house contents is still the most popular way of covering one. But most home insurance policies may have a standard limit of as little as €500 on the value of a bicycle that is covered under contents.

This is no good for many new bike owners - particularly given that the Cycle to Work tax scheme gives qualifying employees the opportunity to buy a bicycle worth up to €1,000 tax-free.

You can add a more expensive bicycle as a 'specified item', which may result in a higher overall premium.

There may also be restrictions on this cover depending on your provider, with some firms only covering your bicycle for theft while inside the home, garage or shed.

Dedicated bicycle insurance, on the other hand, allows owners of high-end bicycles to get a level of cover for their precious machines that would not be possible on a house insurance contents policy.

As well as covering the full value of bikes worth more than €1,500 or so (the usual limit of cover under many home policies), some of these policies include public liability and personal accident cover.

Public liability provides third-party cover in the event that someone makes a claim against you for damage caused by you and your bicycle, while personal accident covers you if you sustain certain specified injuries as a result of a cycling-related accident.

Bikmo is a dedicated bicycle insurance company, covering the UK and Ireland. To insure a bike worth €500 with it would be €55, while ones worth €1,000 and €2,000 would be €102 and €198 respectively.

Bicycleinsurance.ie, run by Blue Insurance, came out with slightly cheaper figures for the same bikes although, unlike Bikmo, it does not offer public liability cover. In any case, make sure you check the terms and conditions, as some policies will insist on you using a particular type of lock, for instance.

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