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Phone Insurance Cleaned up by Banks

current account insuranceA lot of banks offer insurance policy bundles with their so-called ‘packaged current accounts’ and these deals are often too good to be true, plagued with exclusions and strict terms and conditions. The banks are now being forced to clean up their act and improve their insurance packages.

These controversial insurance policies within the ‘packaged current accounts’ are being quietly cleaned up, and are currently costing consumers around £300 per year. The biggest offender in these packages happens to be the mobile insurance policies which have a number of catches in the terms, rendering most claims invalid. The changes have been in reaction to the Financial Conduct Authority’s (FCA) concern over millions of customers paying for policies that they simply cannot use.

It is estimated that around 11 million customers are currently paying for one of these bank accounts that comes with additional ‘benefits’ including mobile phone insurance, car breakdown cover and travel insurance. This sounds like a great deal, but most banks include complex terms, age limits and exclusions which make it almost impossible to make an insurance claim. The Financial Ombudsman Service settles disputes between customers and banks and they have been averaging 70 consumer complaints per week in relation to these packaged accounts which is up from 40 a week in 2012.

The FCA has ordered banks to perform checks at least once a year to make sure that their customer’s packaged insurance products are suitable for their needs and that they will actually be able to make a claim. The number of fraudulent claims has jumped to around 133,000 a year – the Police have reacted by making it even tougher to obtain a theft report, especially for mobile phones.

James Savery, 15 October 2013

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