Mobile Device Insurance: Worth The Cost?

Mobile device insurance is a personal finance decision that depends on several factors. With smartphones being the most expensive gadget most people carry around, it is essential to consider the financial implications of losing or damaging one. Theft, loss, or breakage could cost a small fortune, so it is worth evaluating the need for insurance.

The decision to opt for mobile device insurance depends on the handset's cost, financial position, and attitude towards risk. If individuals can afford to repair or replace their smartphone and still have cash for everyday essentials, insurance may be unnecessary. However, for those prone to losing or breaking things, or those who carry their phones in easily accessible pockets, insurance could provide valuable peace of mind.

It is also worth noting that standalone insurers like SquareTrade and insurance through mobile carriers are available options. Additionally, individuals can include their smartphones in the personal possessions covered by their home contents insurance or opt for self-insuring by setting aside money each month for potential repairs or replacements.

Cost-effectiveness of insurance

When considering the cost-effectiveness of mobile device insurance, several factors come into play. Firstly, the cost of insurance varies depending on the make, model, and age of the phone, as well as the insurance provider. Policies typically range from $5 to $20 per month, with smartphone insurance costing anywhere from £3.50 to £14 per month in the UK. It's important to note that insurance premiums may be higher for older phones, as they are considered higher-risk.

When evaluating cost-effectiveness, it's crucial to consider the deductible, which is the amount you must pay out of pocket when filing a claim. Deductibles can range from $29 to $499, depending on the device and the policy. Some policies may also have different deductibles for different types of damage. Additionally, there may be limitations on the number of claims you can file annually, typically capped at two claims per year.

Another factor to consider is the extent of coverage provided by the insurance policy. Basic insurance usually covers loss, theft, and damage, including cracked screens, liquid damage, and mechanical failure. However, it's important to carefully review the terms and conditions, as some policies may not cover natural wear and tear, aftermarket modifications, or DIY repairs. Accessories such as earbuds and chargers may also be included in the coverage, depending on the policy.

When deciding on the cost-effectiveness of mobile device insurance, it's essential to assess your personal situation. If you have an expensive smartphone, the cost of losing or damaging your phone could be substantial. In such cases, insurance may be a wise investment to protect against unforeseen expenses. On the other hand, if you have a basic, inexpensive handset, the cost of losing or damaging your phone may not justify the monthly insurance premiums.

It's also worth considering alternative coverage options, such as including your smartphone in your home contents insurance or purchasing standalone gadget insurance, which can often be cheaper than mobile-specific policies. Ultimately, the cost-effectiveness of mobile device insurance depends on a combination of factors, including the cost of the device, the insurance premium, deductible, coverage offered, and your personal circumstances.

Risk of loss, theft or damage

Mobile phones are expensive pieces of technology that are often carried everywhere and used daily, so it is no surprise that they are susceptible to loss, theft, or damage.

The risk of loss is heightened by the small size of mobile phones, which can be easily misplaced or forgotten. This is especially true in locations or situations that are outside of your normal routine. In addition, the portability of mobile phones means that they are often left in places such as public transport, cafes, or restaurants.

Theft is also a common occurrence, as mobile phones are a desirable item for thieves due to their high resale value and the amount of personal information they contain. Pickpocketing and snatch-and-grab theft are common methods of phone theft, but it is also increasingly common for thieves to target phones left on tables in public spaces or to forcibly take them from their owners.

Damage to mobile phones can occur in a variety of ways, including being dropped, getting knocked or banged, coming into contact with liquids, or experiencing software issues. Mobile phones are also susceptible to malware and hacking attempts, which can result in the loss of personal information or financial data.

Given the high cost of mobile phones and the frequency with which loss, theft, or damage can occur, it is important to consider the benefits of insurance. Insurance can provide financial protection in the event of a loss, theft, or damage, and give you peace of mind. When choosing a policy, it is important to consider factors such as the cost of the premium, the deductible, the level of coverage, and the ease of making a claim.

Financial position

When considering whether to carry mobile device insurance, your financial position is a key factor. This includes assessing the cost of the phone, your ability to afford repairs or a replacement, and the potential impact on your everyday finances.

Firstly, consider the cost of your handset. Smartphones can cost over £1,000 or over $1,000, and losing, damaging, or having your phone stolen could result in a significant financial loss. If you have an expensive phone, the potential cost of repairs or replacement is higher, and insurance may be a wise decision to protect your finances.

Next, evaluate your ability to afford repairs or a replacement. Ask yourself: "If I lost or damaged my smartphone, or if it was stolen, could I afford to repair or replace it and still have cash to pay for everyday essentials such as food and bills?" If the answer is yes, or if you have a backup phone you could use temporarily, then insurance may not be necessary. However, if repairing or replacing your phone would cause financial strain, insurance can provide peace of mind and protect your finances.

Additionally, consider the potential impact on your everyday finances. If you have a pay-as-you-go deal and a basic, inexpensive handset, losing your phone might not significantly affect your monthly budget. On the other hand, if you have an expensive smartphone with a monthly contract, the cost of losing your phone can be substantial. In this case, insurance can help mitigate the financial impact and ensure you can still afford your everyday essentials.

It is also worth noting that some insurance policies have high deductibles or excess amounts, which you need to pay before making a claim. These can range from £50 to £125 or $50 to $200, and some policies require you to pay this amount upfront before they repair or replace your handset. Therefore, when considering insurance, evaluate whether you can afford this additional cost on top of your monthly premiums.

Finally, if you decide against insurance, self-insuring is an option. This involves setting money aside each month into a dedicated pot to cover the cost of potential repairs or replacement. This approach ensures you have financial protection without the ongoing cost of insurance premiums, but it requires discipline to save regularly and not dip into the fund for other purposes.

Phone insurance features

• Protection against accidental damage: This includes cracked or broken screens, liquid damage, and drops.
• Theft and loss coverage: Some policies cover the cost of a replacement phone if it is stolen or lost, while others offer reimbursement for any unauthorised calls made before the loss was reported.
• Mechanical failure coverage: Insurers may cover mechanical failures that occur after the standard warranty period ends.
• Defect and malfunction coverage: Some policies cover defects, malfunctions, and failures, including battery issues.
• Water damage coverage: Some insurers cover water damage, including liquid spills and submersion.
• Replacement and repair options: Insurers may offer to repair or replace your phone, and some may provide a refurbished device instead of a new one.
• Fast replacement and repair times: Some insurers offer next-day replacement phones or same-day repairs.
• Unlimited repairs: Some policies offer unlimited screen repairs or battery replacements.
• Accessory coverage: Depending on the policy, accessories such as earbuds and chargers may also be covered.
• Multi-device coverage: Some insurers allow you to insure multiple devices under one policy, which can include other electronic devices besides phones.
• Affordable premiums: Phone insurance premiums can vary from $3.99 to $20 per month, depending on the provider, device, and coverage.
• Deductibles: Most phone insurance policies require a deductible, which is the amount you pay out of pocket when filing a claim. Deductibles can range from £25 to £125 or USD 50 to 200, depending on the insurer and policy.
• Claim limits: Some insurers cap the number of claims you can make within a specific period, such as two claims per year.
• Exclusions and conditions: It is important to read the fine print of any policy, as there may be exclusions or conditions that affect your coverage. For example, some policies may not cover phones taken from schools or other public places, or phones left unattended in unlocked vehicles.

Insurance alternatives

If you're looking for alternatives to mobile device insurance, there are a few options you can consider:

• Credit Card Insurance: Some credit cards offer free cell phone insurance if you pay your monthly phone bill with that card. For example, American Express has 11 different credit cards that offer up to $800 in coverage with a $50 deductible.
• Protective Cases and Screen Protectors: Instead of paying for insurance, opt for a good protective case and a screen protector. Otterbox, for instance, offers protective cases for smartphones that can safeguard your device if you drop it.
• Local Repair Shops: If you've cracked your screen or damaged something mechanical, a local phone repair shop may be able to help at a lower cost than insurance deductibles.
• Homeowners or Renters Insurance: Your cell phone may already be covered under your homeowners or renters insurance policy. Check the "personal property coverage" section of your policy to see if your phone is included.
• Self-Insurance: Instead of paying for insurance, you can choose to build your emergency fund. Put the money you would've spent on insurance and deductibles into a savings account. That way, if something happens to your phone, you can use those funds for repairs or replacement.
• Water Damage Protection: If you want to protect your phone from water damage, consider a waterproof case or a water-sealed bag. A well-reviewed water-sealed case can be purchased for around $15, while the DryCase brand claims to be waterproof up to 100 feet for $25.
• App-Based Solutions: There are free apps available, such as Find My iPhone and Plan B for Android, that can help you track your lost or stolen device.
• Online Troubleshooting: Before rushing to a repair shop, try searching online for solutions to common phone issues. You may be able to fix the problem yourself with a quick DIY fix.
• National Mail-in Services: As a last resort, if all else fails, you can consider national mail-in repair services. While these can be more expensive (above $100), they may still be a better option than insurance for certain situations.

Remember to assess your personal situation when deciding whether to insure your mobile device or opt for alternatives. Consider factors such as the cost of the phone, your financial position, your risk tolerance, and your track record with losing or damaging items.

Frequently asked questions