Should you take out insurance against mobile phone scams?

Like it or not, smartphones are increasingly key to buying things, doing online banking and interacting with the wider world.

So the prospect of your phone being stolen is scary, as the customer is not just losing a costly device but also opening themselves up to fraud. 

Someone who steals a phone can have access to bank details, credit and debit card information and everything needed to steal an identity. 

Despite this, the average customer cannot just call up an insurer and buy insurance against fraud which results from their phone being stolen.

But that is all set to change this year with the launch of a new insurance product from insurer Wallife.

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This Biometrics ID deal will pay out if a customer’s smartphone is stolen and they suffer any financial loss as a result.

When the product launches later this year it will also include protection to help stop that sort of fraud from happening in the first place.

But there are a few strings attached, and some of the protection offered by the deal is already provided by banks. 

This is everything we know so far about how the new sort of insurance deal will work.

What does Biometrics ID do?

The idea is the policy protects an individual’s digital identity if a fraudster gets hold of their smartphone. 

It does not pay out for any other sort of fraud loss that does not involve a phone, such as someone being defrauded on a computer.

An app that comes with the Wallife policy can detect if a phone has been stolen using a form of digital fingerprint.

It does this by checking for big changes in how a phone is handled and used, for example a phone being unlocked and operated in a different way to normal.

If likely fraud is established in this way, the policy then pays out for any financial loss.

Customers also get technical help to recover lost data, assistance with cyber bullying and legal help.

People with a Wallife deal also get a payout for legal costs for any offences committed by criminals that have stolen their identity. 

The Wallife app also helps screen links, documents and codes for likely fraud, cutting the chance a policyholder will fall victim to fraud.

Wallife chief growth officer Bruno Ferreira said: ‘In Western Europe, around one in three people have had their digital identities attacked in some way – whether that’s their social media profiles or emails being hacked, or their financial accounts being attacked. 

‘But to date there have been no insurance products to protect affected consumers and help them get back on their feet. 

‘Considering how much of our lives are now lived online, it’s a huge gap in the market that isn’t being served by existing insurance providers.’

The deal will not pay out for the cost of your stolen phone. 

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How much will it cost?

At the moment there are no Wallife policies for sale in the UK.

Wallife is an Italian insurer and is still setting up its UK arm.

However, Wallife’s Italian cyber protection policies start at €54 (£46.08) if paying yearly, rising to €84 and €120 depending on the level of cover the consumer wants. 

A Wallife spokesperson said UK premiums would likely be similar to Italian ones when the deal goes on the market this year.

Don’t I get some of this cover from my bank anyway? 

Yes. If your smartphone is stolen and a fraudster uses it to steal your money, your bank should refund you.

Under Payment Services Regulations, banks must refund victims of unauthorised fraud in full. 

That means part of the protection Wallife offers is already available in the UK.

However, a Wallife spokesperson defended the policy, saying: ‘It is correct to say that consumers can reclaim money lost to fraud from their current bank, but there are more and more grey areas where banks are pushing back against being liable for all cases. 

‘The combination of what Wallife offers – a technological solution that prevents many instances of fraudulent access, education about risks, and insurance coverage – means consumers can have much more peace of mind that their digital identities are protected – including not just their finances, but also their social media profiles and their data.’

Wallife would not pay out for fraud losses if a customer was conned into transferring money to a criminal – but then, nor would half of all banks.

This is known as ‘authorised push payment’ or APP fraud. Because Wallife policies only pay out if a phone is stolen, no APP claims count.

Even banks only pay out half of APP fraud claims, with the exception of TSB, which has agreed to pay all such claims.

What are the alternatives to Wallife?

Currently there are no other insurers selling this sort of insurance for individuals in the UK.

Cyber insurance for businesses has been around since 1997, though it has been slow to take off.

Some other insurers do offer cyber cover as part of home insurance for wealthy homeowners, but there are no standalone insurance deals to cover hacking risks. 

A Wallife spokesperson said: ‘We believe our offering is unique. Current insurance services providers haven’t kept up with online trends and threats, and so there aren’t currently suitable products on the market that cover emerging threats developing from technology, even though one in three people have experienced a digital identity violation.’

In the UK there are other products that offer levels of protection against being hacked, but these are not insurance deals.

For example, computer security firm Norton has an ‘identity advisor plus’ package for £19.99 a year, which scours the internet for your data being abused.

It then alerts you to any identity theft and passes you on to a team of experts who can help. However, it is not an insurance deal and so there is no cash payout. 

Similarly, company Bitdefender’s digital identity protection offers the same protection for £2.99 a month, or £35.88 for the first year.

This post first appeared on Dailymail.co.uk