No, it’s almost never worth it financially to insure your cell phone. Either self-insure (save the money yourself) or get AppleCare+ / Samsung Care+ and call it a day. Unless you’re accident prone to the exact levels allowed under the terms and conditions of the insurance policy, you’ll almost always end up paying more when you add up the monthly fees than you will ever get back in return. And to even get coverage you might have to fight for it – so what’s the point?
How Do Cell Phone Insurers Make Money?
Most cell phone insurances companies aren’t technically a scam (although some are) but more of a horrible deal. Their model is designed to prey on people who don’t do the math or don’t understand that most people will never actually use the insurance. And sometimes it’s really difficult to even use the insurance if you feel like you should be able to. Between the “terms and conditions” and deductibles and hoops & hurdles you have to jump through – using insurance can be difficult.
They like to catch you at the moment you buy the phone – which just so happens to be the highest value that phone will ever be priced at. They’ll scare you with worst-case scenarios and talk about how life altering not having your phone could be. A lot of mumbo jumbo will be pitched your way. But all we’d advise is that you look at this very simple math:
Let’s say you buy an $799 iPhone 15 and insurance coverage for it is $25/month. You feel like $25/month is a reasonable price because of the high price of the phone and you can afford to pay that amount. After 1 year you’ve paid $300 to the insurance company to cover that $799 phone. But wait a minute, Apple covers A LOT of things under their manufacturer warranty during that first year anyway. So what exactly did I pay for?
Is It Worth It After My Warranty Expires?
Alright. Now we’re in Year 2. Now I’m ready to really take advantage of this insurance company. But how? You’re already in the hole $300. By the end of year 2 that number shoots up to $600! This was just a $799 iPhone 15 and the iPhone 16 is already out. How does this make sense? How is this even possible? It gets worse. Let’s say you’re one of the millions of people who got AppleCare+ or Samsung Care+ at the point of purchase. Apple and Samsung already had your bad for almost everything that could go wrong for those first 2 years anyway. 3rd Party insurance is really difficult to justify if you have AppleCare+ or Samsung Care+.
Oh…and by the way – your phone was never worth $799 after you bought it.
My Phone Isn’t Worth What I Paid For It?
Everyone understands the ‘New Car Driven Off The Lot’ analogy. What happens after you buy a shiny new car and drive it home? You now own a shiny USED car that’s worth 10-25% less. The same analogy holds for used electronics – but the price drop is even more steep. The moment you leave the Apple Store or your cell phone carrier’s shop with that ‘BRAND NEW’ iPhone 15, it instantly becomes a ‘USED’ iPhone 15. How much value is lost? A lot. Used phones go for anywhere from 30-70%+ less than a new one. This isn’t logical as used phones that are in good condition can do everything a new one can – but it’s just the way people think and how the market operates.
So you aren’t really replacing your brand new $799 iPhone at any point during your insurance contract. You’re getting insurance coverage (that we argued above doesn’t usually kick in until after year 1 or year 2) on a phone that is worth much much less.
Capitalizing On Fear & Worst Case Scenarios
In-store cell phone insurance sales people are often times commissioned or REQUIRED to pitch the insurance to you. Stores are sometimes evaluated on how many insurance plans they sell. Why? Because it’s more profitable to them to sell the insurance than to sell you the phone or a repair. Think about why that would be the case.
So how do they do it? They need you to buy the coverage the day you buy the phone – at all costs. So how about 1 month free? How about I knock $10 off this month or that one. What if I throw in a free case or tempered glass (which is actually a really smart way to avoid needing insurance by protecting your phone). The sales people have a lot of wiggle room and a TON of margin to get you to sign on the dotted line. It’s easiest to sell the plan at that first moment because that’s when you’re most afraid of breaking it.
If someone paints the scenario of you needing insurance coverage because you “could drop the phone on the way to your car in the parking lot” might I suggest taking a box and bubble wrap in with you to solve that problem.
This is the golden goose of all insurance coverages. Deductibles are how insurance companies prevent you from using insurance – or if you do, it’s going to offset a lot of their cost. For example, let’s say they allow 2 screen replacements during the life of your policy with only a $75 deductible each time. Well, you aren’t just going to go out and waste 1 of those 2 available to you for just a small little crack in the corner are you? And that crack isn’t worth $75 and the trouble of being without your phone during the repair.
A lot of times the deductible will add up to most of the cost of a repair anyway (when compared to a 3rd party shop), but there’s one notable exception. Early in the life of your phone, replacing the screen might actually be VERY costly. When parts aren’t available on the secondary markets, they can be extremely expensive to get a hold of. Paying a low deductible (or no deductible if you’re lucky) to get a screen replaced on the latest and greatest phone could actually save you a lot of money.
That logic is how they get you, and how they maintain their margins by preventing a lot of their money from actually being spent on honoring the insurance.
But My Insurer Says I Can Cancel Any Time
This may be true, but we all know how hard this can be sometimes. If you find an insurance carrier that let’s you cancel without too much hassle, then that might be a good situation.
But making it difficult to cancel is just part of the game they play.
And it’s important to realize that sometimes things are pitched to you at the point of sale that are too good to be true – meaning they AREN’T true. Before signing anything with an insurance provider, make sure it actually is cancellable and that you aren’t committing to a minimum amount of time (ie- a contract).
My Trusted Tech Told Me To Get This
That’s fine. We don’t ever discourage people from listening to an expert they trust. The only caution we would give related to this is – be sure that the technician is speaking freely and not on a directive from management. If you look on Reddit forums, certain companies are forcing their staff and repair technicians to push insurance plans onto their customers at all costs. Stores are being opened and closed in areas because of how they perform selling insurance policies.
Companies that force their technicians to act in this manner should be avoided. Your technician should be free to give you advice that they believe in. Just because management is compelling you to peddle their insurance programs doesn’t make it the best choice for everyone who walks in the door. Profitable for the business doesn’t mean it’s right for the CUSTOMER – or at least not right for EVERY customer. It’s wrong to force experts in a field to use their platform (built on trust) to hustle people into buying things they don’t need.
A More Impartial Look At Cell Phone Insurance
Understanding Cell Phone Insurance
Cell phone insurance is a protection plan offered by various providers, including phone manufacturers, carriers, and third-party companies. These plans typically cover accidental damage, loss, and theft, which are not usually covered by standard warranties.
Pros of Cell Phone Insurance
- Coverage for Accidents: Insurance can cover repair costs for cracked screens or other accidental damage, which can be quite expensive.
- Theft and Loss Protection: If your phone is stolen or lost, insurance can provide a replacement, saving you the full cost of purchasing a new device.
- Peace of Mind: Knowing that you’re covered in case of mishaps can alleviate the stress associated with handling such a vital and expensive piece of technology.
Cons of Cell Phone Insurance
- Additional Cost: Premiums add an extra expense to your monthly phone bill, and over time, these can add up to a significant amount.
- Deductibles: Most insurance plans require you to pay a deductible for repairs or replacements, which can sometimes be nearly as high as the cost of repairing the device out of pocket.
- Coverage Limitations: Insurance policies often have limitations and exclusions, and the claims process can be cumbersome.
Is It Worth It?
The worthiness of cell phone insurance depends on several factors:
- Cost of Your Phone: If you have a high-end smartphone, the replacement cost without insurance could be substantial, making insurance more appealing.
- Risk Factors: Consider your lifestyle and how often you’re likely to need repairs or replacements. If you’re prone to accidents or have lost phones in the past, insurance might be a good idea.
- Financial Situation: Evaluate whether you can afford an out-of-pocket replacement. If not, insurance could be a financial safety net.
- Terms of the Insurance Plan: Carefully read the terms of the insurance plan to understand what is and isn’t covered.
Alternatives to Cell Phone Insurance
- Manufacturer’s Warranty: Most phones come with a manufacturer’s warranty that covers defects and malfunctions for a certain period.
- Credit Card Benefits: Some credit cards offer protection for purchases, including cell phones, which might cover loss or damage.
- Personal Savings: Setting aside money each month into an emergency fund could cover future phone repairs or replacements without the need for insurance.
Whether or not cell phone insurance is worth it for you depends on your individual needs and circumstances. We would argue that it isn’t a great financial decision unless it is used very early in the life cycle of your phone. If you are prone to dropping your phone or losing things, or if you have a new or high-end phone, then we recommend AppleCare+ or Samsung Care+ over insurance to protect your device.
Cell phone insurance can be a wise investment for those with expensive devices, a history of lost or damaged phones, or a desire for extra security. However, it’s not a one-size-fits-all solution. Weighing the pros and cons against your personal circumstances and financial ability is crucial before deciding to purchase insurance for your cell phone.
If you understand the terms & conditions of the insurance provider and know how to use it, then maybe the insurance will work out for you. If you are careful with your phone, protect it with a case and tempered glass, or have a relatively low-end phone, then you may be able to save money by going without cell phone insurance at all. Cell phone insurance can offer peace of mind, but is it truly worth the investment? Financially? Not likely. Peace of mind? Maybe. Ultimately it’s your choice.
- How much does cell phone insurance typically cost? The cost can vary widely depending on the provider and the level of coverage, but it can range from $5 to $25 per month, with deductibles on claims.
- Can I get cell phone insurance after I’ve purchased my phone? Yes, many providers allow you to add insurance within a certain time frame after purchasing a new phone.
- Does cell phone insurance cover water damage? Many insurance plans do cover water damage, but you should check the specific terms of your policy.
- Is it better to go through my carrier or a third-party for insurance? This depends on the coverage options and costs offered by your carrier versus third-party insurers. Compare the plans to see which offers the best value for your needs.
- If I rarely damage or lose my phone, is insurance unnecessary? If you have a good track record with your devices, you might be better off saving the money you would spend on premiums for a potential future replacement or repair.
- What does cell phone insurance typically cover?
Cell phone insurance typically covers accidental damage, loss, and theft. However, some plans may have exclusions, such as coverage for water damage or loss due to negligence.
- How much does cell phone insurance cost?
The cost of cell phone insurance will vary depending on the plan you choose and the value of your phone. However, you can expect to pay around $10-$30 per month for cell phone insurance.
- Is there a deductible for cell phone insurance?
Most cell phone insurance plans have a deductible, which is the amount of money you have to pay out of pocket before the insurance company will cover the cost of a replacement or repair. The deductible typically ranges from $50-$200.
- How do I file a cell phone insurance claim?
To file a cell phone insurance claim, you will typically need to contact your insurance company and provide them with information about the damage or loss. The insurance company will then review your claim and determine whether it is covered under your plan. If the claim is approved, the insurance company will send you a replacement phone or repair your phone.
- Should I get cell phone insurance for my used phone?
Whether or not you should get cell phone insurance for your used phone depends on the value of the phone and your individual needs and circumstances. If you have a high-end used phone, then cell phone insurance may be a good investment. However, if you have a relatively low-end used phone, then you may be able to save money by going without cell phone insurance.
When I’m not writing about tech I’m playing with my dog or hanging out with my girlfriend.
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