Insurance is having a makeover and Trov is just the start

Like many Australians, I bought a new iPhone this week. But unlike the avid tech-heads lining up for the iPhone 8 or iPhone X, I bought a new iPhone 6s with more storage space than my previous handset. The woman beside me was buying a new iPhone 7.

What she and I both knew is that you save a lot of money by buying older models, especially just after a new phone comes out because Apple drops the prices of its existing products with each new release. As a money-saving trick, it doesn't beat buying a cheap Android phone or no smartphone at all, but if you really want an iPhone there are significant benefits to the strategy.

For example, the 128GB model of the iPhone 6s is now $849. Two years ago when it came out, even the 16GB version was more than a grand and the 128GB model cost a whopping $1379. That's a $530 saving after two years and you're still buying a phone that's brand new with a full warranty!

But I digress. This column is actually about how we insure the darn things and the emerging trend of on-demand insurance.

Before I paid, I was asked if I wanted to upgrade to Applecare at a cost of $189 for two years, which would cover me beyond the warranty for accidental damage including breaking the screen and immersion in water.

I said I needed to think about it - being Money editor I need to research these things, after all. I was assured I can enrol any time within 60 days.

Applecare's monthly rate works out at $7.88, which is cheaper than most other options. However, it is more like an enhanced warranty than insurance, as it doesn't cover device replacement in the case of loss or theft.

The insurance offered by the telcos does cover loss and theft but it's more expensive, at about $15 a month. I'm probably not eligible having bought my phone outright directly from Apple.

A quick Google search reveals a few options: Brightside Cover at $12 a month or Phone Insure for $89 a year (less than $8 a month), for example.

Then there's Trov, which is on-demand insurance driven by an app. You can literally turn the insurance on and off by sliding an option within the app. You could, if you wanted to, insure your phone only during your waking hours or only when you're out of the house and save money by doing so.

As far as I can ascertain this is one of a kind in Australia. Trov is a Silicon Valley company but it launched here first to test out the waters in partnership with Suncorp AAI, then Britain and the United States is coming soon.

Figures from Trov say that if you insure an iPhone and have the insurance switched on for eight hours a day it costs just $3.50 a month. Even if you have 24/7 coverage, it's still competitive at $10.50 a month. The excess for screen repair, non-screen repair and device replacement is far less than the telcos. Of course, as with any insurance, you need to read the fine print.

Trov lets you insure most consumer devices and photographic equipment and the company is keen to add other categories, such as sporting equipment and musical instruments. Even when the item is not yet insurable, consumers can upload receipts for the items into their "trove" to store them and to signal to Trov that it's a product you'd like to insure.

There's an element of behavioural economics to consider in all this. The ability to turn the insurance on and off sounds good but are you going to make it a daily habit? You can't set and forget - when you turn it on you're billed for the rest of the month and when you turn it off you're refunded the rest of the month.

And while some times of day may be riskier than others, is there really a time when you don't want to be covered at all? A good starting point would be to check what coverage is available under your home contents insurance and whether it extends outside your home.

Trov chief executive Scott Walchek says most people do leave the insurance on 24/7, but they value having the option to turn it off. He also points out that most Trov customers are Millennials and many of them don't have traditional home contents insurance, especially those who live in share houses.

The Capgemini World Insurance Report 2017 released last week says on-demand insurance generally and Trov specifically are examples of "InsurTech" - like "FinTech" but for insurance, geddit?

Technology is becoming integral to insurance with nearly one in three customers globally saying they use InsurTechs, either exclusively or in combination with incumbent firms, according to the report. It's helping insurance providers reach new customers who wouldn't otherwise buy a policy.

I'm looking forward to more innovation like this - and if there's an app involved I've now got enough space to check it out.

Caitlin Fitzsimmons is the editor of Money. Twitter: @niltiac

Facebook.com/CaitlinFitzsimmons

The story Insurance is having a makeover and Trov is just the start first appeared on The Sydney Morning Herald.

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