Cellphone contracts and insurance: What you should know
29/03/2018 Being stuck in a contract or finding out the cellphone you are using is not covered, can be a real pain. Thanks, in part, to the Consumer Protection Act, life has become a little easier when it comes to handling these unfortunate situations. Knowing your rights can make dealing with this a lot easier.
Renewals and upgrades
Automatic contract renewals are a thing of the past. According to the CPA, your service provider must inform you of your contract’s expiry at least 40 days before it is due to end. Along with the notice, you should be informed of the options that are available to you. These should include the option to renew, upgrade, downgrade or cancel the contract.
It is important to note however, that while your contract will not be automatically renewed until you instruct your service provider to do so, the contract will continue on a month-to-month basis. This simply means that the service provider will continue to bill you monthly until you decide how to move forward.
When cancelling your contract, inform your service provider in writing and keep a copy of this instruction. In this way you have written proof of the cancellation and it’s not easy for someone to come back with some story which suggests otherwise. It is also helpful to send your bank a copy of your notice in order to avoid any future debit order going off.
You no longer have to wait until the agreement period is over or have to incur unreasonable penalties to exit from your phone contract. If you wish to cancel your existing cellphone contract, you must give your service provider a written 20-day notice informing them of this and you aren’t required to give your reasons for cancelling.
It is however important to know that cancelling your contract does not rid you of liability for any amounts you owe to your service provider. In order to recoup some of the money the service provider expected to receive from a full term contract, you may be charged a cancellation fee. The CPA does not prescribe a particular amount as the penalty rate differs from provider to provider but it must be a reasonable amount relative to how much you had already paid and how many months you still had left on the contract.
This fee that you pay will include any amounts owed up to the date of cancellation, such as airtime used and the service provider can also claim for any goods that they supplied to you, services provided or discounts granted such as you receiving a free or discounted phone. Remember a company can’t charge you for the full amount owing in respect of the full term contract, this cancellation fee needs to be fair and reasonable.
If a company continues to bill you after you have settled your account and paid the cancellation fee, you can use Resolver to lodge a complaint to dispute these charges.
The high cost of smartphones has made cellphone insurance a staple for many consumers, so it is worthwhile getting to know a little more about this insurance, what you are entitled to and what to pay careful attention to.
There are three main ways to get insured. Either through an insurance company, a retailer or with your service provider.
Most insurance companies cover a range of risks including accidental loss or damage, theft and water damage. Not all companies cover all risks though, so it is important to know what exactly you are covered for.
Insurance companies don’t offer stand-alone insurance for your phone, instead the phone will be covered under another type of cover or added to an existing policy like home insurance policy or home contents cover.
If you bought a phone with a store card and had it insured with the retailer, you must remember that the insurance may be tied to the rest of your debt at the store. If your account payments are not up to date, your claim will most likely be rejected.
If you stop using the phone, you damage it or it stops working from wear and tear, remember to cancel your insurance, otherwise you may go years paying for a phone that you don’t use.
While some retailers only offer insurance for phones you bought from their store, in some instances you can get a stand-alone policy at a retailer you didn’t buy from.
Getting insurance through your service provider means your premium will be added to your monthly payments if you are not a prepaid customer, in which case the premium will be debited from your bank account.
MTN, Vodacom, Telkom and Cell C offer basic cover against loss, damage and theft. Each provider may only cover you in certain circumstances for example, others may not cover you for water damage. Make sure you understand the circumstances under which your phone will be covered.
How to improve your chances of a successful claim
As it is with any type of insurance, your claim may be rejected for silly mistakes, most of which are a result of not understanding the specifics of your policy. Whether related to theft or accidental damage. Below we discuss a few tips to keep you on the front foot should you need to claim.
Material changes in the insured phone
Neglecting to inform your insurer of a change or upgrade of the phone you insured with them puts you at a great disadvantage should the time come for you to lay a claim. The insurer will most likely reject it because they were under the impression that your phone was in the same ‘condition’ it was in when you insured it. You would thus be in breach of your contract by not providing them with complete information.
Similarly, if the user of the phone changes you must inform your insurer of this change.
If you change your number or you cancel your SIM card, you must immediately inform your insurer, service provider or store. Failure to do so will result in an unsuccessful claim as your policy is attached to the number you are using.
Switching network providers will most likely negate your cover if you are insured with a service provider. For instance, if your phone is insured with Vodacom and you decide to use a Telkom SIM card for a day, if your phone is lost or damaged during that time, Vodacom will not pay your claim.
Follow the correct claim procedures
In the event that you lose your phone or it is damaged, you must take action swiftly. Where relevant, you need to have reported a theft to the police within 48 hours of the incident. Furthermore, you must have your SIM card blacklisted. Thereafter, depending on your insurer, you have between 30 to 60 days to submit a claim.
- Incident details including date and circumstances
- Device information - make and model and your IMEI number (this is a 15 digit number used to identify your phone, it can be found in your phone under or next to the battery pack and in the phone’s documents)
- A ITC number, received when you blacklist your SIM card
- Case number from the police as well as an affidavit in the case of theft
- Policy and your personal details
In the event that you are not satisfied with the outcome of your claim, you should contact your insurer and inform them of your dissatisfaction. They may re-assess your claim but this doesn’t guarantee a different outcome. In that case, you can then approach the Short-term Insurance Ombudsman with the dispute. Resolver can assist you with raising a complaint against your service provider, retailer or insurer and help escalate your complaint to the Ombud.
Take care of your phone
Many claims are rejected because of owner negligence. Using your non-waterproof phone in the bathtub or putting your phone in your jean’s back pocket may seem sensible until it falls out and is damaged or is stolen. Always consider the safety of your phone, otherwise you run the risk of replacing or having the phone repaired at your own expense.
You are also encouraged to make use of a phone cover or screen protector to reduce the phone’s damage risk.
It is clear that, as the insured, you have a big part to play in making certain that your insurance works for you, you are paying for it after all!
Good to know
What it may mean when you ‘keep the insurance’
When you inform your insurer of a phone change or upgrade, you may be given the choice to ‘keep your insurance.’ lt is usually safe to assume this applies to the new phone only, but it may not always be the case. Always be sure to check which phone you are paying for.
Do your research - insure early
It is uncommon, but some insurers may only insure new phones. Vodacom is one such insurer - they only insure phones that are less than 30 days old. This is mainly because it is less risky as the phone will have no history of repair.
Whatever you do - the important thing is to be responsible and always communicate with your service provider and insurer. If something is unclear, ask questions! It will go a long way in sparing you a lot of time, frustration and money.