It's common knowledge that many retailers make a large proportion of their commissions selling related insurance products and, sometimes make more selling these policies. So, the question you should ask yourself is, am I getting a good deal here?
Most of the time, if you're offered mobile phone cover, you'll have a choice of one policy from one insurer which is not in your best interests - it's likely got more to do with the retailers commission. At the very least you should ask the retailer how their policy compares to others and the market, both in terms of price and policy features. Whatever they say, you need to compare as many policies as possible to get a true idea of what price and policy constitutes value for money. The best way to do this is by using the internet and a price comparison site combined with a little time reading real customer reviews. Neglect this part and you could end up paying inflated premiums for a policy that will never pay out.
Even before you get to that stage, you need to check that your phone is not already covered by any other insurance you already have. For example, some good home insurance policies will cover your possessions whilst away from the home and, unless specifically excluded, that should include your mobile phone. Check with your insurance company and ask the question.
Another alternative is to self-insure your phone. Get a price for mobile phone cover for your handset and simply save that amount each month into a high interest bank account. If your phone is lost, stolen or damaged just a few months after you buy it, you're not going to get much of a payout but it's up to you to decide how much of a risk that really is. If you hardly use your phone and just keep it for emergencies, then the risk might be low and insurance not really necessary. But if your phone is quite expensive and you use it often in public, it may be prudent to invest in a good insurance policy.
So, if you are sure you want a mobile phone insurance policy, get online and compare cover and premiums. There aren't many price comparison sites for mobile phone cover but there aren't that many policies either, so getting quotes manually won't take too long. To find these sites either Google 'mobile phone insurance' or use a good directory but also remember to read independent customer reviews as these are the people who have tried and tested the policies with many gone through the claims process.