MOBILE phone insurers have been told to overhaul the small print in contracts after the regulator found in some cases it was “virtually impossible” to claim.

The Financial Conduct Authority (FCA) highlighted examples of poor claims and complaints handling as well as products which were not designed to meet customers’ needs and terms and conditions that were unclear and unfair.

It has urged firms to bring in more everyday insurance products that do “what they say on the tin” – adding that next month it planned to impose a significant fine on one player in the market for poor handling of complaints.

The review of nine firms by the consumer watchdog comes amid rising anger that technicalities in small print are being used to reject legitimate claims.

The financial ombudsman tackled 615 new complaints about mobile phone insurance in 2012/13, finding in favour of consumers in 71% of cases.

In one example, a claim was rejected because the owner left her phone in a hotel room, which was deemed to be a public place as soon as she checked out and therefore was excluded from cover.

The regulator said that descriptions of what is covered and what is not were often too broad and ambiguous.

FCA director of supervision Clive Adamson said: “What this review shows is that sometimes there is a gap between what the customer thinks they are getting, and what they are really getting.

“Closing this gap will lead to greater trust and confidence.”

The FCA said that firms were already working on making improvements to their products since the launch of its review.

Mr Adamson added: “Mobile phone insurers need to continue in this vein and show their customers that they are putting them at the heart of their business models and offering everyday insurance products that do what they say on the tin.”

Figures from Ofcom show that 92% of adults personally own or use a mobile phone, while there are more than 10m insurance policies in existence.