People purchasing certain cell phone insurance in Maryland will see the major details of their contract upfront, under an agreement negotiated with four major wireless carriers and a cell phone insurance company by state Attorney General Douglas Gansler.
Gansler, who pursued the deal after his 13-year-old son lost his cell phone and he learned that despite monthly insurance payments, there was still a $50 charge to replace the phone, said the agreement will make it easier for consumers to understand what they sign. Information about the monthly fee, the amount of any deductible, the type of replacement equipment that may be provided, limits on the number or value of claims and the cancellation policy, will be “prominently highlighted” in brochures to customers who purchase wireless phone insurance.
Gansler said he thought few people knew their contracts called for a $50 deductible to receive a new phone despite making $5 monthly payments for the insurance, plus the fact that Asurion could give customers a refurbished, used phone as a replacement device.
“While that happens there are ads on TV for new phones that will cost you $39.99,” Gansler said.
“There was nothing illegal happening before, but the problem is most people sign the dotted line without looking through that brochure,” Gansler said. “You could need two to three hours to look through it and maybe a lawyer helping you to understand it.”
The deal applies to insurance company Asurion Protection Services and requires the firm more prominently disclose the key terms and policies in materials they provide to AT&T Mobility, Sprint Nextel, T-Mobile USA and Verizon Wireless, who in turn will ensure customers are provided with the key terms when they enroll in the insurance plan.
A statement from Chuck Lane, president of Asurion Corp., said the brochures were always reader friendly and contained the key terms as required by Maryland law, though they have agreed to improve the materials.
Although the deal applies only to Maryland, Gansler said he was confident other states will follow suit.
