Cell Phone Insurance: Who's Covered?

Cell phone insurance is a policy that covers loss, theft, damage and mechanical failure. It is a common offering from cell phone carriers, insurance providers, and even some credit card companies. The global mobile phone insurance market size was valued at USD 28.74 billion in 2022, and is expected to grow at a compound annual growth rate (CAGR) of 12.5% from 2023 to 2030. This growth is driven by the increasing adoption of smartphones, rising costs of devices, and the susceptibility of phones to physical and technical damage.

While cell phone insurance can bring down the cost of a cracked screen, it may not always be the most cost-effective option for consumers in the long run. The insurance often comes with a high deductible, and there are limitations on the number of claims that can be made. Additionally, consumers may receive a refurbished device as a replacement, rather than a new one. As such, some experts recommend alternative options such as free cell phone insurance from credit card companies, investing in a protective case, or paying for repairs at a local shop.

Cell phone insurance covers loss, theft, damage and mechanical failure

Cell phone insurance is a great way to protect your device from loss, theft, damage, and mechanical failure. While it may not be necessary for everyone, it can provide peace of mind and financial protection in case of unexpected events. Here are some key points to consider:

Coverage Details

Cell phone insurance typically covers a range of incidents, including loss, theft, accidental damage (such as cracked screens), liquid damage, and mechanical failure after the standard warranty period. Some policies may also cover accessories like earbuds and chargers. However, it's important to carefully read the fine print of your chosen policy, as coverage can vary.

Cost Considerations

The cost of cell phone insurance varies depending on factors such as the insurance carrier, the type of phone, and the deductible amount. Monthly premiums can range from $5 to $20, with most falling between $7 and $15. Deductibles, which are the out-of-pocket expenses when filing a claim, typically range from $50 to $200. It's worth noting that you may have to pay a deductible for each claim, and there might be limits on the number of claims you can make per year.

Alternatives to Cell Phone Insurance

Before deciding on cell phone insurance, it's worth considering some alternatives:

• Credit Card Protection Plans: Some credit cards offer free cell phone insurance if you pay your monthly bill with their card. This can be a cost-effective way to protect your device.
• Protective Cases: Investing in a high-quality protective case, like an Otterbox, can significantly reduce the risk of damage to your phone.
• Local Repair Shops: For minor repairs, such as a cracked screen, local repair shops often provide services at a lower cost compared to insurance deductibles.
• Homeowners or Renters Insurance: In some cases, your cell phone may already be covered under your homeowners or renters insurance policy. It's worth checking the "personal property coverage" section of your policy to see if this applies.
• Self-Insurance: Instead of paying for cell phone insurance, you can choose to set aside the money you would have spent on premiums and deductibles into a savings account. This way, you build your own financial cushion for any phone-related expenses.

Making a Decision

When deciding whether to purchase cell phone insurance, consider your personal circumstances. If you have a history of losing or damaging your phone, or if you want peace of mind, insurance may be a worthwhile investment. However, if you are careful with your phone and can afford repairs or replacements out of pocket, you may opt to forego insurance. Asking yourself questions like "Am I prone to breaking or losing my phone?" or "Can I afford to replace my phone without financial strain?" can help guide your decision.

It's important to read the fine print of your insurance policy to know exactly what's covered

When it comes to cell phone insurance, it's crucial to scrutinize the fine print of your policy to know exactly what coverage you can expect. While insurance plans can provide peace of mind and financial protection in the event of damage, loss, or theft, understanding the specifics of your coverage is essential.

• Varying Coverage Limits: Different insurance providers offer varying levels of coverage. Some plans may cover accidental damage, water damage, cracked screens, and mechanical failures. Others may also include loss and theft, though often at a higher premium. It's important to know what specific incidents your policy covers to avoid unpleasant surprises when filing a claim.
• Deductibles and Out-of-Pocket Costs: Most cell phone insurance policies come with deductibles, which are the out-of-pocket expenses you'll need to pay when filing a claim. These deductibles can vary significantly, ranging from $29 to $499, depending on the insurer and the type of damage. Understanding your deductible amounts for different scenarios will help you assess the true cost of your insurance coverage.
• Limits on Claims: Insurance plans often impose limits on the number of claims you can make within a specific period, typically per year. Some plans may allow for two or three claims annually, while others might offer more flexible options. Knowing this limit is crucial to ensure you don't exceed it and to help you decide if the coverage suits your needs.
• Refurbished Devices: In many cases, insurance providers will send you a refurbished or repaired device as a replacement, rather than a brand-new one. This is an important distinction, as refurbished devices may not offer the same performance or reliability as new ones. If receiving a new device is important to you, look for this detail in the fine print.
• Exclusions and Restrictions: Insurance policies typically have a list of exclusions and restrictions. For example, natural wear and tear, unauthorized repairs, or modifications to your phone may void your coverage. Understanding these exclusions will help you avoid situations where you assume you're covered, only to find out that your claim is denied due to specific restrictions.
• Coverage for Accessories: In addition to the phone itself, you may want coverage for accessories like earbuds and chargers. Not all insurance policies cover accessories, so it's important to check if this is included in your plan. If accessory coverage is offered, there may be specific conditions or limits attached.
• Mechanical Failure Coverage: Some insurance plans cover mechanical failures, but the fine print may reveal important details about this coverage. For instance, some policies may only cover mechanical failures after the manufacturer's warranty has expired. Understanding these nuances will help you make an informed decision about your insurance choice.
• Cost of Replacement: Understanding the process and costs associated with replacing your insured phone is crucial. The fine print should outline the steps involved in filing a claim, the timeframe for receiving a replacement, and any associated costs beyond your deductible, such as administrative fees.
• Claims Process: Reading the fine print will help you understand the claims process, including any requirements and timelines. Some policies may have specific procedures for filing a claim, such as submitting documentation or following certain protocols when your device is lost or stolen. Knowing these details in advance will make navigating the claims process much smoother.
• Monthly Premiums: The monthly premiums you pay for your cell phone insurance can vary based on several factors, including the insurance carrier, the type of phone, your deductible preference, and the level of coverage. Reading the fine print will help you understand the factors influencing your premium and any potential changes that may occur over time.

In summary, while cell phone insurance can provide valuable protection for your device, it's important to recognize that not all policies are created equal. Reading the fine print empowers you to make an informed decision, ensuring you select a plan that aligns with your specific needs and provides the coverage you expect. This due diligence can save you from unpleasant surprises and help you maximize the benefits of your cell phone insurance.

Insurance policies don't cover natural wear and tear

While cell phone insurance can be a great way to protect your device, it's important to understand that insurance policies don't cover natural wear and tear. Here are some key points to consider:

Exclusion of Natural Wear and Tear

Natural wear and tear is not covered by cell phone insurance policies. This means that any damage that occurs gradually over time due to regular use is not insurable. It is considered the cost of owning a cell phone for an extended period. Unless there is extreme damage to your phone, repairs or replacements due to natural wear and tear will not be covered. This exclusion is standard across insurance providers and is an important factor to keep in mind when considering cell phone insurance.

Importance of Authorized Repairs

It is crucial to have your cell phone repaired by qualified professionals only. Repairs performed by unauthorized individuals or entities may void your insurance coverage. Local repair centers, Geek Squad, and manufacturer-certified repair shops (such as Apple, Samsung, or Google) are recommended. Going to an unauthorized repair shop may result in a loss of coverage, even if the damage is unrelated to the repair. This is an important factor to consider when deciding whether to insure your cell phone.

Modifications and Customizations

Cell phone insurance typically does not cover modifications or customizations made to your device. This includes tethering your phone for free, using the touchscreen with gloves or a stylus, creating custom ringtones, de-branding your phone, or linking it to a remote car starter. These modifications are considered outside the scope of standard cell phone usage and are therefore not covered by insurance policies.

Understanding Coverage and Exclusions

When considering cell phone insurance, it is essential to carefully review the terms and conditions of the policy. Understand what is covered and, just as importantly, what is not covered. While insurance can provide peace of mind and financial protection in certain situations, it is not a blanket solution for all possible issues with your device. Natural wear and tear, unauthorized repairs, and modifications are generally excluded from coverage.

Alternatives to Cell Phone Insurance

While cell phone insurance can be beneficial in certain situations, it may not be necessary for everyone. Here are some alternatives to consider:

• Credit Card Protection: Some credit cards offer free cell phone insurance if you pay your monthly bill with their card. This can provide similar coverage without the additional monthly cost of cell phone insurance.
• Protective Cases and Screen Protectors: Investing in a good protective case and screen protector can go a long way toward safeguarding your device from accidental damage. This option is generally more cost-effective than insurance and can provide similar peace of mind.
• Local Repair Shops: In the event of a cracked screen or mechanical issue, local repair shops often offer more affordable repair services than insurance deductibles.
• Homeowners or Renters Insurance: Your cell phone may already be covered under your existing homeowners or renters insurance policy. Check the "personal property coverage" section of your policy to see if this applies to you.
• Emergency Fund: Instead of paying for cell phone insurance, consider putting that money into a savings account. This way, you can cover the cost of repairs or replacements yourself, and any money left over remains in your pocket.

You can get cell phone insurance through your carrier or a third-party subscription service

Cell phone insurance is not a legal requirement, but it can be a good idea to have it in case something happens to your phone. You can get cell phone insurance through your carrier or a third-party subscription service.

Cell Phone Insurance Through Your Carrier

Some cell phone carriers offer insurance as an add-on to your monthly bill. For example, AT&T, T-Mobile, and Verizon all provide this option. The cost of these plans usually depends on the type of phone, the number of people and phones covered, and your cell phone plan. These plans often cover accidental damage, water damage, broken/cracked screens, mechanical failures, loss, and theft. However, even with insurance, you may still have to pay a deductible for fixing a cracked screen or replacing a lost or stolen device.

Cell Phone Insurance Through a Third-Party Subscription Service

You can also purchase cell phone insurance through a third-party subscription service such as AppleCare+, Samsung Care+, SquareTrade, or Asurion. These services typically offer affordable rates and may provide additional benefits like premium tech support or identity theft recovery. The cost of third-party insurance depends on the provider, the type of phone, and the coverage amount and term you choose. Additionally, some credit card companies offer free cell phone insurance if you pay your monthly bill with their card.

Insurance deductibles can be as high as $299 for a top-tier smartphone

Cell phone insurance is designed to cover accidental damage or loss due to theft, making it similar to comprehensive coverage on a car insurance policy. It's marketed as a money-saver when you drop, damage, or lose your phone. However, it's not always a good idea to insure your phone through your wireless carrier, as money expert Clark Howard warns that it's a "horrifically terrible idea" and a "rip-off". Instead, he recommends getting free cell phone insurance from a credit card or investing in a protective case.

Even if you've paid to insure your phone, you'll likely still owe a deductible for fixing a cracked screen or replacing the device if it's lost or stolen. Screen repair costs up to $49 with cell phone insurance, and a standard deductible ranges from $25 to as high as $299 for a top-tier smartphone, such as the iPhone X, or even up to $499. While these charges will only be due if you file a claim, you'll still be paying the monthly cost of your cell phone insurance regardless.

The cost of cell phone insurance depends on several factors, including the insurance carrier, the type of phone, the deductible, and more. If you have an iPhone or Galaxy, you can purchase insurance directly through Apple (AppleCare) or Samsung (Samsung Care+). Prices start at $3.99 per month, and there are several plans and payment options depending on the model. You can also buy insurance through your cell phone carrier, with costs depending on the type of phone, your cell phone plan, the number of people and phones covered, and more. Finally, you can buy cell phone insurance through a traditional insurance company, either as a standalone policy or as part of your homeowners or renters insurance policy.

Most cell phone insurance policies require a deductible, meaning that if you file a claim, you'll have to pay a portion of the cost out of pocket. The size of your deductible will depend on your insurer and the policy you choose, but they typically range from $50 to $200. Policies can also have different deductibles for different types of damage. Your deductible usually applies per claim rather than per year, and you may be limited in the number of claims you can file annually.

Cell phone insurance can save you money by reducing your out-of-pocket costs if something happens to your phone. Depending on the model, it could cost upwards of $1,000 to replace if lost or damaged. With a cell phone insurance policy, you would only be responsible for your deductible. For example, if you had a phone worth $1,000 and an insurance policy with a deductible of $100, and you accidentally dropped your phone in the bath, you would only have to pay $100 for a new phone.

Frequently asked questions