Cell Phone Insurance - Should You Get It?

Should you get cell phone insurance?  Given that smartphones are virtually 100% penetrated (i.e. everyone has one!), coupled with the phasing out of subsidies, the cost to replace these high tech gadgets is really quite high.  Thus, considering phone insurance is a much more realistic and common consideration.   Many different companies will offer you the opportunity to insure your cell phone.  Even at the point of sale you will have retailers and wireless providers attempting to get you signed up to a policy that will add extra costs to your monthly payment.  Or you may have been approved, or seen ads from third parties wanting to sell you insurance (i.e. not related to your wireless provider).  Of course the purpose of insuring a mobile phone should be clear to most, since you will usually have invested a significant amount of money in the handset itself.  So adding a little extra to make sure it's properly protected seems to make a lot of sense depending on your personal situation and risk tolerance.

The problem with cell phone insurance is that not every policy will give you the same coverage, and like any kind of insurance you will unfortunately need to read the small print to find out just what will be required of you.  For example, some policies will be comprehensive, covering accidental damage, loss, and theft of your cell phone, so that you don't have to worry about coming up with a wad of cash to cover the costs of replacement or repair.  On the other hand, others will only deal with one or two of these eventualities, and there can be all sorts of clauses to validate/confirm your situation, including excess charges to pay if your wireless handset is particularly expensive.  In short, making a claim can be a relatively complex procedure if you choose the wrong cell phone insurance policy, so doing your due diligence is advised.  In my experience, the cell phone insurance provider was fast and easy to work with, and I experienced no problems whatsoever.  In other words, it doesn't have to be a bad experience!


Do you need it?
The main thing to think about when looking at cell phone insurance policies is whether you will actually need the coverage.  If you regularly lose or damage your mobile phone, or if you have a particularly expensive smartphone then a policy could well be worth every penny for the peace of mind.  If you are careful with your phone, do not have a track record of leaving it on public transportation, at restaurants, etc., or have an inexpensive handset that will not be that costly to replace, then there should be less reason to invest in insurance.  In addition, keep in mind that the longer you have the phone, the less value it has, meaning that you can replace it with the same or even better model at a much lower cost.  It's really the first 12-18 months where replacing it will be the most costly.

The companies behind the coverage will be banking on trustworthy users helping to subsidize those who are careless with their gadgetry, and since there are no premium hikes for serial smartphone losers, there is usually a flat rate that everyone pays, regardless of your claim history.  Not every insurer will charge a flat rate for coverage as this is usually something which wireless providers do.  Some will take into account the value of your phone, and give you cheaper deals based on this.  But it does mean that people with particularly expensive models will be paying more if you go for an independent insurer rather than the one-size-fits-all package that is generally offered by wireless providers.  Equally noteworthy is the fact that wireless company insurance deals will usually have small excess charges, but deals with outside insurers may require higher excess payments if a full replacement is required.

Watch out for deductibles!
It's also important not to forget about deductibles.  A deductible is when you have to pay a fixed amount when you make a claim.  For example, $50 for a feature phone, and $150 for a Smartphone.  These are usually covered in the bold print, and are inferred above when I spoke about possible extra charges.  Deductibles are key, because if you have to pay $100 or $150 to receive a replacement phone from the insurance company, you may just be better off buying a new phone, or trying to find a used one on eBay.  Awhile back I used to have insurance on my smartphone; it was $7/month with a $50 deductible.  This was worth it because the phone cost many hundreds of dollars at the time.  However, as phone prices started to come down, and the deductible was increased to $100, it made no sense for me to continue with the cell phone insurance plan; I canceled it.  That said, I have insurance on my wife's smartphone, as she usually has the top-of-the-line Samsung Galaxy, and has a history of damaging them.

Conclusion
One final aspect to bear in mind about cell phone insurance is whether or not you already have coverage without realizing it!  If you purchased your phone using a credit card, many U.S. credit cards offer automatic insurance for lost, stolen, or damaged products.  Usually lost or stolen coverage is just for 30 to 90 days though, while warranty coverage usually doubles the manufacturer warranty up to one additional year.  Lastly, consider paying for insurance for the first 12-18 months, and canceling it thereafter, knowing that at that point getting a replacement will be much less costly, and you may be ready to upgrade if you do lose or damage your phone at that point.  Ultimately, your decision will largely have to do with your personal situation and comfort level, so don't feel pressured one way or the other!

Be Heard!  Let prepaid wireless providers know what you want; fill out the survey now.