While cellphone insurance claims make up a small portion of the issues the National Financial Ombud (NFO) dealt with last year, it is increasingly concerned that claims are being rejected because the insured device wasn’t being used with the specified SIM card.
Hannes Bester, adjudication manager at the NFO’s Non-life Insurance Division, says the office finalised about 11 000 cases last year, with cellphone cases accounting for around 4% of the total.
The NFO’s Non-life Insurance Division, where these complaints are dealt with, was created in 2024 through the amalgamation of the former Short-Term Insurance Ombudsman and other regional financial ombuds.
Bester says the NFO is seeing claims declined after “the SIM card being swapped, whether it’s an eSIM swap or [physical] SIM swap,” and the issue often comes down to how the policy is explained at the point of sale.
Even when the condition is printed in bold, “an insurer is required to explain and advise you at point of sale, even before inception of cover,” says Bester.
Tablet trouble
One case involved a tablet that was snatched from a toddler through an open car window. The insurer rejected the claim because the SIM card had not been blacklisted after the robbery.
The consumer maintained “he was not advised at the inception of the policy that the SIM card had to be registered in accordance with RICA” and that there was no SIM card in the tablet because it was used only over WiFi.
Yet, Edite Teixeira-McKinon, lead ombud of the Non-life Insurance Division, says insurers cannot just rely on the condition that the registered SIM card was in the device. To reject a claim on those grounds, they must also show the policyholder was informed of the requirement before the policy was taken out and that the handset was not being used with the specified SIM card.
The company later accepted the NFO’s recommendation to settle the claim after acknowledging the tablet’s “unique usage,” given that there was no SIM card to register with RICA, says Teixeira-McKinon.
Choices, choices, choices
Cellphone insurance is generally sold either as a standalone, or as part of a household contents policy, the NFO says.
Standalone cover typically requires the handset to be used with a specified SIM card – a fraud-reduction measure that often comes with lower premiums, since the device is usually subsidised by a network provider. The requirement also aligns with RICA, which requires SIM cards to be registered to a verified identity and address.
Vodacom, whose cellphone insurance is typically sold alongside a handset contract, says it tells customers upfront that cover is linked to the SIM being active in that device. “This is... clearly stipulated in our terms and conditions. It is not simply buried in fine print, precisely to avoid the kind of claim dispute the Ombud describes.”
Bester says mobile operators generally have stricter requirements, since they’re covering a contract rather than just the device. “So, the contract obviously includes your SIM card.”
Household contents policies work differently as cellphones must be listed under the portable possessions or “all risks” section, usually for an additional premium, the NFO explains.
Ernest North, co-founder of Naked Insurance, says the company doesn’t tie cellphone cover to a specific SIM card at all. “Whether you choose to cover your cellphone as a standalone item, or specify it as part of your home insurance cover, your cellphone insurance is linked to the specified device rather than to a particular SIM,” he says.
Ways and means
Insurers can check which SIM was being used with a handset during the claims process, as consumers may be asked to give permission for them to access their data, after which the company can determine whether the SIM had been used with the device, says Bester.
“Insurers have quite a lot of methods and methodologies in terms of determining whether the SIM card is actually used with your device.”
Bester says, while the onus is on the insurance company to explain terms and conditions, consumers should insist that terms and conditions are explained, that they get a copy of the policy, and that they alert their insurance providers to any changes regarding the device or SIM card. He adds that “a policy contract is a two-way street”.
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