Cell Phone Insurance: Worth It?

Cell phone insurance is a highly debated topic, with some people swearing by it and others advising against it. The cost of smartphones continues to rise, with some phones costing upwards of $1000. This makes cell phone insurance an attractive option for many people, as it promises to repair or replace a device when needed. However, there are also drawbacks to consider, such as high deductibles and the possibility of receiving a refurbished device instead of a new one.

Cell phone insurance typically covers accidental damage, water damage, broken or cracked screens, mechanical failures, loss, and theft. While this may sound like a great deal, especially for a phone worth hundreds of dollars, it's important to consider the cost of insurance over time and the potential for high out-of-pocket expenses if a claim is filed.

Before deciding whether to insure your cell phone, it's worth exploring alternative options. These include checking if your credit card offers free cell phone insurance when you pay your monthly bill with it, purchasing a protective case, trying a local repair shop, and checking if your homeowners or renters insurance policy covers your cell phone. Ultimately, the decision to insure your cell phone depends on your individual needs and circumstances.

Pros and cons of cell phone insurance

Cell phone insurance can be a great idea for some, while others see it as a waste of money. Here are some of the pros and cons to help you decide if it is right for you.

Pros

One of the main reasons why cell phone insurance has become so popular is its low cost. In most cases, you can purchase coverage for as little as $5 per month, which can be added to your cell phone bill. This gives you peace of mind, knowing that you will be able to get a replacement phone, regardless of whether it is under warranty. This takes the guesswork out of what will happen if your phone breaks or is stolen before you are ready to buy a new one.

Cons

A potential downside of cell phone insurance is the hassle of making a claim. For example, if your phone is stolen, you will probably have to file a police report with your insurance company before the claim is accepted. The costs can also add up over time. In addition to the monthly premium, there is usually a deductible of $50 to $100. When you add up these expenses, you may be better off buying a new phone.

Other Options

If you are considering insurance, it is worth looking at other options. For example, some credit card companies offer extended warranties or theft protection if you use the card to purchase the phone or pay your monthly bill. You could also check if your homeowner's or renter's insurance covers electronics. Additionally, third-party companies like SquareTrade offer affordable alternatives to traditional insurance, covering the most common smartphone problems: damage, malfunction, and accidents.

The decision to insure your cell phone ultimately comes down to your personal circumstances and preferences. If you are prone to accidents or live in an area with a high risk of theft, insurance may be a worthwhile investment. However, if you are careful with your phone and prefer to save money, you may be better off without it.

How does cell phone insurance work?

Cell phone insurance works similarly to other types of insurance. You sign up for a policy with a cell phone carrier, insurance provider, or another company, and in return for your monthly premium, they agree to compensate you for some or all of your losses if your phone is damaged, lost, stolen, or breaks down.

Cell phone insurance typically covers loss, theft, damage, and mechanical failure. Some plans also cover accessories, including earbuds and chargers. However, many insurance policies won't cover natural wear and tear, and you may not be covered if you've made changes to your phone, such as aftermarket modifications or DIY repairs. Additionally, cell phone insurance generally doesn't cover anything already covered by the manufacturer's warranty.

When you make a claim, your insurance company will try to give you a replacement phone of the same make and model, but it may be refurbished and not always new. You may also receive a different colour or type of phone.

Most cell phone insurance policies require you to pay a deductible, which can range from $50 to $200, and you may be limited to the number of claims you can make per year.

You can purchase cell phone insurance through your wireless carrier as an add-on to your monthly bill, or through a third-party subscription service or traditional insurance company.

What does cell phone insurance cover?

Cell phone insurance covers accidental damage, loss, theft, and mechanical failure. This includes cracked or broken screens, water damage, and camera damage. Some plans also cover accessories like earbuds and chargers.

However, it's important to note that insurance policies vary, and some common exclusions include natural wear and tear, after-market modifications, and DIY repairs. Additionally, cell phone insurance typically does not cover anything already covered by the manufacturer's warranty.

When considering cell phone insurance, it's essential to read the fine print carefully to understand exactly what is covered and what is not. The cost of insurance and deductibles can vary significantly, and it's important to weigh the benefits against the potential costs.

Some alternative options to consider for protecting your cell phone include:

• Free cell phone insurance from a credit card: Some credit cards offer built-in cell phone insurance when you pay your monthly bill with the card.
• Protective case and screen protector: Investing in a good protective case and screen protector can help safeguard your phone from damage.
• Homeowners or renters insurance: Cell phones may be covered under your existing homeowners or renters insurance policy.
• Self-insurance: Instead of paying for cell phone insurance, you can set aside the money you would have spent on premiums and deductibles into a savings account to cover any potential repairs or replacements.

What does cell phone insurance not cover?

Cell phone insurance is a protection plan that covers situations where your phone is lost, stolen, or damaged. However, there are some important exceptions to what is covered. Here are some things that cell phone insurance typically does not cover:

• Natural wear and tear: Most insurance policies won't cover damage or malfunctions that occur as a result of normal use over time.
• Unauthorized repairs or modifications: If you make any changes to your phone, such as aftermarket modifications or DIY repairs, your insurance policy may not cover any damage, even if it is unrelated to the changes you made.
• Manufacturer's warranty: Cell phone insurance generally does not cover anything that is already covered by the manufacturer's warranty, including defects, cosmetic flaws, or malfunctions within the warranty period.
• Accessories: While some policies may cover accessories like earbuds and chargers, this is not always the case. Be sure to read the fine print of your policy to know exactly what is and isn't covered.
• Claims caps: Many insurance providers limit the number of claims you can make within a certain timeframe, typically two claims per year.
• Replacement phone: If you need to make a claim and receive a replacement phone, it may not be the same make, model, or colour as your original phone. It also may not be a new phone, but a refurbished one.

It's important to carefully review the terms and conditions of any cell phone insurance policy before purchasing it to understand exactly what is and isn't covered.

How much does cell phone insurance cost?

The cost of cell phone insurance varies depending on the make, model, and age of the phone, as well as the insurance provider and the level of coverage. Basic insurance plans typically start at around $5 per month and can go up to $20 per month or more for more comprehensive coverage. Some providers also offer family plans or bundle discounts, which can reduce the overall cost.

When considering the cost of cell phone insurance, it's important to factor in the deductible, which is the amount you will need to pay out-of-pocket when filing a claim. Deductibles can range from $25 to $299 or more, depending on the phone model and the type of damage. It's also worth noting that insurance may not cover the full cost of a new phone, and you may receive a refurbished device as a replacement.

Some alternative options to consider for protecting your cell phone include:

• Credit card protection: Some credit cards offer extended warranties or purchase protection for items bought with the card, including cell phones.
• Homeowners or renters insurance: Your phone may already be covered under your existing insurance policy, or you may be able to add coverage for a small fee.
• Self-insurance: Instead of paying for cell phone insurance, you can set aside the money you would have spent on premiums and deductibles into a savings account to cover any future repair or replacement costs.
• Local repair shops: For minor issues, such as a cracked screen, local repair shops may offer more affordable solutions compared to insurance deductibles.

Frequently asked questions