Phone Insurance: Dropping Coverage, Saving Money

Cell phone insurance is marketed as a money-saving option for when you drop, damage, or lose your phone. However, it may not always be the best option financially. While insurance offers additional protection over a standard warranty, your money may be better spent on a decent phone case.

Cell phone insurance lets you pay a low monthly or annual fee covering damage outside a manufacturer's typical warranty. For instance, these policies protect against major damage from drops, water, and sometimes theft. Even if you lose your precious mobile device, insurance may cover the cost.

Like other types of insurance, phone insurance includes a deductible—an out-of-pocket amount you'll need to pay before an insurance provider covers the rest. Depending on how high that deductible is and the price of your phone, buying a new phone could be the cheaper option. Check your deductible before signing up for an insurance plan.

You don't have to buy insurance from your carrier

Wireless carriers are in the business of selling phones, not insuring them. For that, they rely on a third party, typically a company called Asurion. So, if you're looking to switch carriers because of a bad claims experience, know that you'll likely be dealing with the same insurer elsewhere.

But you don't have to get insurance through your carrier. You can opt for third-party insurance companies such as SquareTrade, which will cover your device against damage and defects for a fraction of what carriers typically charge.

Other options include AppleCare+ for iPhone users, Samsung Care+ for Samsung enthusiasts, and Google's Preferred Care coverage for Pixel users. Additionally, Progressive, the Allstate-backed SquareTrade, and AKKO also offer cell phone insurance plans. However, these will come as a separate bill that you'll need to manage.

It's important to note that phone insurance is only worth considering if you predict a high likelihood of experiencing a lost, stolen, or damaged phone. Otherwise, you may end up paying a monthly fee without ever needing to file a claim. In such cases, investing in a high-quality case and screen protector might be a more cost-effective option than insurance.

You can get dropped from your plan for making a claim

It's important to note that while it is rare for an insurance company to drop you after a claim, it is not impossible. Most states have regulations against insurance companies dropping clients without warning, and insurance companies typically need to provide a valid reason for cancellation.

In the context of phone insurance, most providers cap your claims at two in a 12-month timeframe. This can be problematic for accident-prone individuals, who are the ones for whom phone insurance makes the most sense. If you make more than the allowed number of claims, your insurance provider may cancel your policy.

Additionally, if you have a history of cancelled policies or have difficulty finding insurance coverage, you may be classified as a high-risk customer. This can make it more challenging and expensive to obtain coverage in the future.

To avoid being dropped by your insurance company, it is advisable to practice safe handling of your device and make timely payments of your premiums.

You have little control over your replacement

When it comes to replacing your phone, you have little control over the specifics of the replacement device. While you may request a phone of the same make and model, your insurance company is not obligated to provide you with an exact match. This means that you could end up with a phone that is a different colour or type, or even a refurbished device rather than a brand-new one.

This lack of control can be frustrating for customers who have specific preferences or requirements for their phones. For example, someone who prefers a particular colour or model may be disappointed if they receive a replacement phone that does not match their original choice. Similarly, those who value having the latest technology may be unhappy with a refurbished device, which may not have all the same features or capabilities as a newer model.

Additionally, the replacement process can be time-consuming and inconvenient. Depending on the insurance company and the specific plan, it may take several days or even weeks to receive a replacement phone. This can be a significant hardship for individuals who rely heavily on their phones for work, personal communication, or other important tasks.

In some cases, insurance companies may try to repair the damaged phone instead of providing a replacement. This can be problematic if the damage is extensive or if the phone is older and repair parts are difficult to obtain. Customers may also be responsible for paying a deductible for the repair, which can add to the overall cost and inconvenience of the process.

Overall, while cell phone insurance can provide peace of mind and financial protection in the event of damage or loss, it's important to recognise that you may have limited control over the replacement process and the specific device you receive. Reading the fine print of your insurance policy carefully before signing up can help you understand what to expect in the event of a claim.

You may be better off with a high-quality case and screen protector

Phone insurance can be a great way to protect your device from accidental damage, loss, or theft. However, it is not the only option, and there are some compelling reasons why you may be better off investing in a high-quality phone case and screen protector instead.

Peace of Mind and Extra Protection

A screen protector provides an extra layer of safety for your device, especially when paired with a phone case. This combination offers 360-degree protection, safeguarding your phone from scratches, cracks, and water damage. Screen protectors are particularly useful when you accidentally drop your phone, as they can prevent the glass from shattering. While phone manufacturers have improved the durability of glass screens, adding a screen protector provides that extra assurance.

Cost-Effectiveness

Phone insurance typically involves paying a monthly or annual fee, which can add up over time. In many cases, you may never need to make a claim, making it an unnecessary expense. A high-quality phone case and screen protector, on the other hand, are one-time purchases that offer long-lasting protection. This option is often more cost-effective, especially if you don't anticipate needing frequent repairs or replacements.

Ease of Installation and Compatibility

While standalone screen protectors offer added protection, they can be tricky to install properly. Phone cases with built-in screen protectors eliminate this hassle and ensure a precise fit, maintaining the touch sensitivity and functionality of your device. Additionally, by purchasing a case and screen protector together, you avoid any compatibility issues that may arise when buying these items separately.

Maintain the Aesthetic of Your Phone

Phone cases and screen protectors have evolved to provide seamless protection without compromising the design of your phone. Clear polycarbonate cases, for example, allow you to showcase the unique colour and style of your device while keeping it safe. Some people also prefer the smooth feel of the glass screen, which a screen protector may alter. With advancements in case designs, you can now have both protection and a sleek look.

A Tailored Solution for Your Needs

The decision between phone insurance and investing in a high-quality case and screen protector ultimately depends on your specific needs and preferences. If you are concerned about theft or frequently lose your phone, insurance may provide more comprehensive coverage. However, if you are primarily focused on protecting your phone from accidental drops and scratches, a well-made case and screen protector can offer sufficient protection at a lower cost.

You can get free cell phone insurance from a credit card

If you're looking to save some money on your phone insurance, you might want to consider getting a credit card that offers free cell phone insurance. This is a common credit card benefit, and it can save you a lot of money in the long run.

Here's how it works: when you pay your monthly cell phone bill with a credit card that offers this perk, you get insurance coverage that can reimburse you for a damaged or stolen phone. This coverage usually includes protection against theft, loss, defects, or damage, and in some cases, even cosmetic damage like cracked screens. Most credit card companies will require you to pay a deductible, which can range from $25 to $100, but this is still a lot cheaper than paying for phone insurance separately.

It's important to note that credit card cell phone insurance is usually secondary coverage, meaning it kicks in after any other insurance you might have. For example, if you have insurance from your phone carrier or homeowner's insurance that covers your phone, you'll need to make a claim with them first before using your credit card coverage.

When choosing a credit card for cell phone insurance, be sure to read the fine print as coverage limits and exclusions vary. Some cards may limit the number of additional lines covered or have specific requirements for filing a claim. Additionally, not all credit cards offer this benefit, so be sure to check with your credit card company to see if it's included.

• Wells Fargo Active Cash® Card
• Chase Freedom Flex℠
• Capital One Venture X Rewards Credit Card
• The Platinum Card® from American Express
• U.S. Bank Visa® Platinum Card
• U.S. Bank Altitude® Connect Visa Signature® Card
• Delta SkyMiles® Platinum American Express Card
• Delta SkyMiles® Reserve American Express Card
• Wells Fargo Autograph℠ Card

Frequently asked questions