The Hidden Truth Behind Smartphone Insurance

Not long ago mobiles were dumb, but with the internet everything changed. Like humans they have their own world – its called the smartphone eco-system – of different apps, which allow you to shop, book a cab, order food, play games, and even find blind dates.

The world of smartphones and humans’ dependence on them have only grown. It has also made them more expensive. All of us know it that the future phones will be slimmer, sexier, more expensive. Thanks to Apple, the late Steve Jobs company that changed the way phones looked and performed.

Others followed.

The iPhone 7, launched last year came at Rs 70,000 – that’s more than the average price of motorcycles (Rs 50,000) in India.

This change has opened a whole lot of money-making opportunities. Phone makers will make more money, so will designers, app makers, component makers and shopkeepers. But there is a new breed, too, insurance companies.

Insurance companies want to get their hands on everything that has a life span – humans, computers, laptops, cars, houses, TVs and fridges, and now mobiles.

Recently, I bought a new phone and was checking some plans on Airtel. I went to my nearby Airtel store and the salesman pitched me a new plan which he said, was insurance, and would keep my phone safe. The pitch was simple: if you use the internet, you are exposed to hackers who can steal your identity, passwords and even financial information.

But, I don’t trust salesmen much. After all they earn through commissions, and there is nothing wrong with that. So I decided to dig a bit deeper. The website says that the plan can be availed for Rs 49 or Rs 79, for a monthly plan, which includes damage security of the smartphone, 2 GB cloud storage, anti-malware protection, spam block, anti-theft security, contact recovery, among other benefits.

That alone wasn’t satisfying. While subscribing the plan, Airtel auto-detected my phone since I use the Airtel app and showed that I fall under Rs 79 plan, amounting to Rs 948 annually. It promises up to two claims, with a limit up to Rs. 25,000 and also, a free pick and drop.

Promise vs Reality

So, I decided to read the terms and conditions, which usually throws up nuanced details, which customers don’t bother going through. I wasn’t wrong. Here it is:

21. Airtel has no liability whatsoever in respect of any claims or disputes and any resulting damages or losses, whether direct or indirect, relating to the customer availing, not receiving or customer’s use of the Offer or the services of Norton and / or One Assist

22 Airtel makes no warranties or representations whatsoever in respect of the offer and the mobile services including as to its fitness for any particular purpose, merchantability, quality, availability, disruption or error free operation

Under Handset Protection Terms and Conditions:

2.2 The Terms and conditions mention here-in are pertain to device damage protection only, under the Airtel secure Plan as provided by Airtel and managed by OneAssist consumer Solutions Pvt Ltd. (“OneAssist”)

2.3 These terms and conditions (“Terms”) shall govern the transaction between OneAssist Consumer Solutions Private Limited (“OneAssist”) and the final user whose name appears on the Airtel Secure Plan membership (“Customer”) in relation to the Plan(s) powered by OneAssist and marketed by Airtel.

9.3 The Customer acknowledges, confirms and covenants that that the object of the Plan(s) being availed of or provided by OneAssist is not an ‘insurance product’ but insurance is merely an add-on feature of the Plan(s) which is provided complimentary to customer to provide Cashless repair facility on a group insurance basis and that the Customer has availed of the Plan(s) in accordance with this understanding.

10.1 OneAssist/Airtel shall not be liable for any incidental, consequential, exemplary, special or indirect damages (including, but not limited to, loss of profits, revenues, data and/or use) to the customer. OneAssist disclaims all implied warranties of merchantability, fitness for a particular purpose, and non-infringement. OneAssist/Airtel’s total liability to the customer under the Terms and/or the relevant Plan Terms shall not exceed the Plan Fee.

Simply, Airtel isn’t offering an insurance product. It is a complementary offer to the customer against the subscribed plan. But there is a caveat – if you file for a claim Airtel will charge 5% on the claim amount, but that’s more of a facilitators fee. Airtel will take the ownership of your claims, and has outsourced the function to a little known OneAssist.

Under the claims – here is the list of eligibility criteria’s:

• Caused by theft, or attempted theft from unlocked vehicles or rooms (you must prove that the rooms were locked)
• Claim on gadget during the hire or loan of the insured gadget to a third party (most of us buy smartphones on credit card EMIs)
• Damage that is covered by a supplier, dealer or factory warranty (remember, the first year your smartphone manufacturer takes the service responsibility)

For a company that claims to thrive on customer centricity and ability to serve the customer better, Airtel has shrugged off its responsibility in this particular case. A quick call to OneAssist’s customer care divulges a little more. The customer care executive referred Airtel’s plan as a third-party insurance, and grabbed the opportunity to sell the company’s own plan that comes at Rs 2,799 for a year, and promises a lot more.

So, I decided to check Airtel’s rivals. Vodafone has Vodafone RED Shield. It is almost similar to the Airtel’s but comes as partnered with Servify and New India Assurance Company Ltd.

Do we really need a Smartphone Insurance?

While insurance is a nice hook to earn more, there is little you can do with its limitations. Moreover, they are not offered for phones more than a couple of years old.

In India, the average ownership cycle for smartphones is between one to one-and-a-half years. For the first year the phone maker offers warranty, and if you are planning to buy a second-hand phone, which is a couple of years old, Airtel won’t offer you any benefit.

Thankfully, I read the legal conditions before clicking the subscribe button. Moreover, reviews on Amazon and Google Play Store show Vodafone’s partner Servify has better ratings compared to OneAssist.

Meanwhile, with the increasing usage of my phone makes little sense of buying an insurance. I will be glad if it remains hail and hearty after a year, when the manufacturer’s warranty ends.

There is always something fishy in the Terms and Conditions document. With all the patience, Rahul loves to read these mysteries. He believes that the truth needs to unfold, hidden in these documents. He earns his living as a communication professional and lives his passion by writing on business mysteries. Follow him on Twitter and network with him on Linkedin