Cell Phone Insurance: Worth It or Wasteful?

Is cell phone insurance worth it? Experts are divided on whether cell phone insurance is little more than a profit machine for cell phone carriers or if it’s actually useful for folks who want to avoid the high cost of device repairs and replacement.

If you’re prone to breaking or losing your electronics, then cell phone insurance might be worth it for you. Otherwise, as the Wall Street Journal says, an extended warranty on your gadget is a waste of money.

Is Cell Phone Insurance Worth It?

Could cell phone insurance be worthwhile for you to add to your monthly phone bill? Let’s explore some of the ins and outs and see if cell phone insurance is worth it before you sign away $8-12 of your money each month on a policy:

How Cell Phone Insurance Works

Cell phone insurance is a cell phone protection plan that provides coverage in case your cell phone breaks, is lost, stolen, or damaged. In most cases, cell phones must be purchased from the cell phone carrier for you to qualify for this type of insurance. Cellphone carriers offer different levels of coverage and plans which can range from $9-$15 per month per line on average.

If you have more than one person on your family plan then it may be cheaper if everyone purchases their own cell phone insurance instead of sharing a single policy with the entire family. There are many factors to consider when purchasing cellphone insurance such as how often you break or lose your cell phone and what kind of deductible do you want before the company will cover any damages?

What’s Covered? 

The four major carriers – AT&T, Verizon, Sprint, and T-Mobile – offer phone insurance plans that include coverage for theft and loss, but it’s extremely important to read the fine print to see which instances qualify, whether or not you’ll need a police report to be eligible for a theft claim, and how much your deductible will cost in order to get a new phone.

There are some exclusionary clauses buried in the fine print of these cell phone insurance contracts, and if you sign up for insurance without knowing exactly what’s covered and what’s not, it might end up being a waste of money. For example, most contracts include a maximum on the monetary value of your claims each year (e.g., no more than 2 claims per year, with no more than $1,500 in damage/loss/theft claims allowed).

Furthermore, the cost and coverage for accidental damage varies by carrier. Sprint, for example, covers “Loss, theft, liquid or physical damage, and mechanical and electrical breakdown due to defects, malfunction, or normal wear and tear” under their Total Equipment Protection plans.

However, repairs come with a deductible ranging from $25-125, plus your claim must be approved before you qualify and you can only have the device repaired at a Sprint-approved center. Other major carriers have similar requirements. So, read through the details of the fine print no matter how boring and dry it may be before agreeing to pay for an insurance plan on your phone.

Monthly Cost Estimates

In most cases, you’re not only making monthly insurance payments to your cell phone provider, but you’ll also have to pay a deductible for your repairs or replacement as well. If you crunch the numbers and decide that a 2-year insurance plan plus the deductible you’ll have to pay is still significantly less than having to buy a new phone out-of-pocket, then insurance might be a viable option for you. Here’s an idea of what you’ll be paying if you’re a customer with one of the four major carriers:

AT&T currently charges $7 per month for cell phone insurance, which includes theft, loss, and accidental damage or malfunctioning protection. Deductibles range from $50 to $199 (iPhones cost $199 to replace).

Verizon has a few different protection plans available, such as the $9-11/month Total Mobile Protection plan (which includes full device coverage and the Tech Coach support option) and the $7-9 per month Total Equipment Coverage plans (which cover the device if it’s lost, stolen, or damaged and comes with a deductible of $99-199 for smartphones).

Note: Verizon mentions on their website that their insurance provider, Asurion, could potentially fulfill your claim with new or refurbished equipment.

Sprint charges $9-13 per month for their Total Equipment Protection plan (the higher end plan includes tech support and more data backup for the contents of your phone). This includes loss and theft coverage, as well as accidental damage and phone malfunctioning.

If you need to replace your phone for whatever reason, your deductible will range from $50 to $250, depending on the retail value of your device (most iPhone and Samsung Galaxy models cost $200 to replace and $100 to repair).

T-Mobile has 4 different cell phone insurance plans, ranging from $4-12 per month. On the low end, the $4 per month plan includes Lookout Mobile Security Premium, which backs up your phone’s data and helps you remotely locate your device on a map or by wirelessly sounding off the “scream” function.

T-Mobile’s $10/month insurance plan protects your phone from accidental damage, loss, and theft, while T-Mobile’s $12 per month insurance plans offer the same protection as their basic plan plus Lookout Mobile Security or inclusion into the JUMP! Program, which lets you upgrade to the latest phone models once your current device is 50% paid off.

What About Homeowner’s or Renter’s Insurance?

Many homeowners’ insurance and renters’ insurance plans cover smartphone devices in instances of loss or theft (sometimes even damage), however many experts believe this is not an optimal option for a few reasons.

Firstly, your home or renters’ insurance deductible might be higher than the value of the phone, making it a frugal alternative to just replace the phone on your own. Secondly, the more claims you add to your account – even a relatively small claim like a lost phone – might increase your premium costs.

Instead of resorting to your homeowners’ or renters’ insurance, you could check your credit card company to see if they offer an extended warranty on devices you purchased with that card.

Add the coverages you need Personalize your policy with coverages that reflect your way of life.

Outside Insurance Options

In 2015, Gadget Review published an excellent comparison piece on aftermarket smartphone insurance plans, which concluded that SquareTrade was the best insurance provider for cell phones, followed by Protect Your Bubble, which also offers an affordable smartphone protection plan for customers. If you get your insurance through an aftermarket insurance provider instead of your cell phone carrier, you could save quite a chunk of change over the life of the phone.

For example, SquareTrade charges $149 for a 2-year protection plan (which includes malfunctions and accidental damage, but not theft or loss), while AT&T insurance for 24 months will cost you approximately $264 and T-Mobile will set you back around $240 for the same time frame. SquareTrade also comes with a $99 deductible, while the major cell phone carriers have an average deductible of $199.

If your phone costs $400 or less, then insurance through an aftermarket provider may not be worth it either, because most of them do not cover loss or theft (you’d have to trade in a damaged device to qualify for a new phone), and you’ll end up paying a collective $250 to insure and replace your device. When insurance costs more than 50% of your phone’s retail value, it’s probably a better bet to forgo insurance, but it could very well be worth it for folks with more expensive smartphones.

How to Minimize Damage or Loss of Your Phone 

Whether or not you opt for a monthly insurance plan, there are several ways to protect your cell phone from theft and loss. There are several tracking apps available, such as Lookout or Find My iPhone or Find My Lost Phone (for Android). These apps allow you to use another device – such as a laptop or tablet – to wirelessly pinpoint the last location of your phone, even if the device has since been turned off.

Investing in a protective case for your phone (as well as screen protection to avoid cracks) will also prolong the life of your phone without requiring constant repairs. There’s a small upfront cost for the protective casing, but it’s worth the long-term peace of mind that comes with knowing your phone is protected, even if you opt-out of monthly insurance.

What do you think? Is cell phone insurance worth it? Do you have insurance on your cell phone?