If you happen to be accident prone, having a cell phone insurance plan seems like a good idea. After all, you are spending hundreds of dollars on a cell phone plan.
Whether you drop it in the pool (the dreaded water damage) or a power surge causes an electrical malfunction, it makes sense to cover your investment, right?
You can buy cell phone insurance at the time you purchase your new mobile phone. Cell phone carriers provide insurance coverage touting peace of mind for you in that if anything happens to your phone they'll replace it for you. However, what's sometimes lost in the fine print might make your jaw drop.
Is phone insurance coverage a good idea? Here are some factors to keep in mind when considering an Android or iPhone insurance plan.
In This Guide
Replacing Your Phone Can Be Expensive
Since insurance providers can never have enough of your money, they add a deductible to your cell phone coverage. This non-refundable deductible is the amount you pay before they process the insurance claim. Below is a look at the deductible amounts charged by each carrier's plan:
- Verizon - $99-$199 for smartphones; $49-$199 for basic phones and tablets
- AT&T - The starting deductible ranges from $50-$199, though if you don't file any claims for a specified time you can receive up to a 50 percent discount on your deductible
- Sprint - $50-$100
- T-Mobile - $20-$175
Therefore, when you sign up for one of these plans, not only are you paying a monthly fee, you'll pay a non-refundable deductible as high as $200 for a replacement phone. That math is not in your favor, especially if you chose to buy your new phone on a contract plan. This value distends further when you consider your replacement phone might not even be new.
You're At Their Mercy for Replacement Phones
Insurance providers are under no obligation to replace the exact phone you had. While some do their best to supply you with the same model, you could end up receiving a refurbished phone too.
The reason for this is insurance carriers have new and refurbished models to ensure they have adequate inventory for their customers. So, when you file an insurance claim, you are rolling the dice on the model you receive.
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Insurance Companies Drop Problem Customers
If you are someone who damages their phone often, cell phone insurance is a smart buy. At the same time, it's important to understand most cell phone protection plans carry a maximum amount of claims you can file in a specified time--two claims in 12 months is the norm.
With this in mind, if you are prone to damaging your phone, you want to buy a durable case for protection, and if you lose it often, consider duct taping it to you. If you have filed two claims in a year, the insurance company can deny your third claim and even drop you from the policy.
In many ways, this seems nonsensical because the insurance policy is there to protect the people who require it the most. At the same time, insurance companies want to make money, so the more risk you present to them, the more likely they are to drop you.
Buy Insurance Directly Through the Provider
When you buy cell phone insurance through the carrier, they use a third-party provider for service. Logic dictates you might save money then by skipping the middleman and going directly with the insurance company.
In the short term, you will. Providers like SquareTrade charge lower premiums than you would pay with carriers. With that lower cost comes less device protection, though. With cell carriers, you can choose comprehensive tiered plans, such as the device protection available through the Asurion insurance company. You get coverage for things like liquid damage, theft and loss with Asurion protection.
SquareTrade doesn't provide coverage for these happenings, although there are companies which do - like Worth Ave Group. Unlike other independent insurers, Worth Ave Group offers coverage for unusual damage like electrical malfunction from a power surge, plus fire and flood. It all comes down to the trade-off between how much coverage you want and how much you need to pay for it.
Do I Have Alternatives?
One of the best alternatives is to use a credit card to purchase the phone. Many card providers offer extended warranties to cover any malfunctions the device might have. Moreover, using your credit card is a smart way to lower your monthly cell phone bill. If you pay your monthly cell bill with your credit card and your device becomes lost or stolen, your card provider might provide financial protection for your loss.
If you have a current iPhone (iPhone 6s and newer), it makes more sense to buy AppleCare+, which is Apple's version of an iPhone insurance plan. For $129.99, you receive the following benefits:
- One year of hardware coverage
- 90 days of free support
- Repair or replacement of your phone, its battery, and earphones
- You can file two claims during the length of coverage
- You pay low deductibles when filing claims--$29 for screen damage and $99 for other accidental damage plus tax
- The coverage lasts for two years
With AppleCare+ you receive a full range of features similar to what you would with cell phone insurance plans, for less per month and with a lower deductible. You also get peace of mind knowing you're covered for things like water damage, which is not covered under the regular iPhone warranty.
Other Things to Know
You may have other questions on specific situations regarding your devices. Here's the deal on a few of those special circumstances:
- Pre-existing conditions: if you're hoping to buy insurance protection and then make a claim for existing damage, think twice. Prior damage - in other words, pre-existing conditions from which your device is already suffering - render it ineligible for coverage on virtually every plan out there.
- Multi-device protection: the news is better in terms of insuring multiple devices at a discount. The major providers offer multi-device protection packages which cover all the phones on your plan.
- Premium handset protection: as the name implies, this kind of smartphone insurance plan boosts your coverage, adding things like liquid damage insurance and theft and loss protection. Premium handset protection is typically marketed differently by each provider. For example, T-Mobile calls it "Premium Device Protection" while Sprint's version is Sprint Total Equipment Protection. The carrier also offers Sprint Total Equipment Protection Plus, which adds tech support to the deal.
Contact your carrier for information about other situations not covered here.
Related: How to Find a Lost Phone
In reality, there are no perfect solutions. If you have the cash saved for the off chance your new phone gets lost or sustains accidental damage, a cell phone protection plan doesn't make sense. However, if you don't have that money saved, then insuring your mobile phone with something like Asurion protection through your carrier or buying an AppleCare+ iPhone warranty makes a lot of sense.
The best approach is to try to extend the manufacturer warranty first. This is a less expensive alternative, offering you many of the same features you find with a cell phone insurance policy. If your device is no longer under manufacturer warranty and you used your credit card to pay for your cell phone and bill, then contact your provider to see if you have any coverage through them. Cell phone insurance should be viable only after you exhausted all your other options, and only after you've combed all of the fine print.
Does your carrier offer cell phone insurance? If not, then you might want to switch if you're considering phone insurance. You can use our tool to see a side-by-side cell phone comparison table.
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