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Should you take out cell phone insurance?

The question of whether or not cell phone insurance is worthwhile or not depends on what kind of device you are looking to have covered and where you’re getting the coverage from.

A good rule of thumb is that basic phones do not need to be covered but smartphones and tablets should be. Typically, basic phones have a retail price between $150 and $250 even though customers usually buy them for $0-$100 with a contract extension. With these low cost phones, you can usually find a used one on eBay or some other place if needed for a fraction of the price for a used device. Cell phone carriers typically charge $5/month for insurance which is $120 over two years along an insurance claim fee of about $50. That means that if you had to replace a basic device you would’ve spent $170 to do so over the course of 24 months; this means that insurance for basic phones is not worth it.

Other devices such as smartphones and tablets, however, are worth purchasing insurance; just not through the carrier. Carriers charge an average price of $8/month for smartphones, which is $192 over the coarse of 24 months with an additional deductible of $99 giving you a total payout of $291 over the course of two years. However, if you purchase protection for a third party insurance provider, the costs can be much less which would make purchasing insurance a good investment. Typically, these companies have upfront costs instead of a monthly subscription which is a higher upfront cost but saves your money in the long run. For instance, a typical third party insurance provider charges $130 for 24 months worth of coverage which is a $62 savings over the monthly service offered by the carriers. They also have an $80 administrative fee instead of a $99 deductible which means that if you had to use a third party provider, it would cost you about $210 instead of $390 which is a $180 savings. The average smartphone has a full retail price of $450 to $650 which is considerably more than if you had to utilize the third party insurance for $210. As you can see, the insurance is much more more it with smartphones and tablets over carrier insurance.

Should you get insurance for the iPhone? The answer is still yes even though the costs are slightly higher. Typically, iPhone insurance has a cost of $199.99 with a $150 deductible but carriers, such as Verizon, charge $10/month and have a $150 deductible and the Apple Care program does not cover lost or stolen devices. If you had to use the third party insurance for a replacement device, it will cost you about $350 instead of the full retail price from Apple of $650 or higher.

The main reason why insurance typically does not pan out for people is because the consumer feels as though their money is “wasted” if they don’t utilize the insurance they’ve been paying for. This is a completely understandable reason to not get third party insurance when dealing with carriers directly. However, some third party insurance providers offer device buy back programs in which they will pay you for your old device. Lets say you purchased smartphone insurance through a third party provider who offers a buy back program; they will pay you 25% of the phone’s full retail value when you are ready to upgrade. The average smartphone retail price is about $550 and when they pay you for your old device at 25%, that means you’ll receive $137.50 for your old device when the smartphone insurance only cost $130. This is a great program that some third party insurance providers give to their customers which makes their protection programs worry free.

So is cell phone insurance worth it? For basic phones, typically not but, in today’s age of smartphones, iPhones, tablets and third party provider options, yes. These offerings can greatly reduce how much you would need to pay for a replacement device and give you a worry free protection plan with device buy back programs. Hopefully, this helps clarify when to get and when not to get cell phone insurance.

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