Is cell phone insurance worth the price?

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If you’re anything like me and my friends, you’ve dropped your phone once or twice. Smartphones are basically giant, rectangular pieces of glass waiting to break. Every time my phone drops, my heart jumps a little. Sometimes, getting nervous about it seems illogical: I watch the Apple keynotes where they describe how strong their new glass is and I’ve wrapped my phone in a protective case.

But research tells me that my anxiety is not unfounded: according to Plaxo, a cloud-based syncing service, one-third of smartphone owners have lost or damaged their phone. A study in 2013 found that most damaged smartphones were damaged or destroyed within the first ten weeks of ownership. SquareTrade estimates that 23 million Americans have damaged their phone during a sporting event, either from an angry throw or by dropping their phone in beer (more common than you might think).

Which raises the question - is it worth getting an insurance policy for my cell phone?

As with any insurance policy, cell phone insurance is about risk management. First, ask yourself: if your cell phone broke or was lost tomorrow, could you pay out of pocket to replace it?

Remember that full price is not the same as upgrade price - if you bought your phone from a carrier with a contract, you paid a lot less than full price for your phone. For example: a new iPhone 6 on contract is $199. A new iPhone 6 to replace the one you lost is $649. You can get cheaper refurbished phones from carriers and other retailers (Et tu, Gamestop?), but you will be limited to their selection.

If you can afford to eat the cost of a new phone, I’ll save you some time: cell phone insurance is not for you. But if you’re looking for the most cost effective way of protecting yourself from losing or breaking a phone, is an insurance plan the answer? Read below for our breakdown of the options available.

From your carrier (Asurion)

If you’ve ever bought a phone from a carrier, you’ve had a cell phone salesman try to sign you up for an insurance policy. Those policies aren’t provided by the carrier - instead, they’re outsourced, most likely to a company called Asurion. In the U.S., Asurion provides policies for Verizon, AT&T, and Sprint (it also used to provide policies for T-Mobile).

Despite coming from the same source, cell phone insurance policies from Asurion will vary between carriers when it comes to cost, deductibles, and the amount of coverage. Asurion will cover loss, theft, accidental damage, and malfunction.

Asurion has come under fire for either not fulfilling their contract or having strangely specific fine print. David Lazarus at the LA Times wrote of a woman who had her claims denied because her phone wasn’t on AT&T’s network at the time of the loss. Mitchell Hall at PC Mag felt cheated when Asurion offered him a refurbished phone of a lower value than his top-of-the-line Galaxy Nexus.

That’s a big con for carrier insurance plans. Asurion is unlikely to replace your lost or damaged phone with a new phone of the same type, or even a refurbished phone of the same type. In the words of Hall, "you’ll take what you’re given, and you’ll like it."

Insurance plans from the various carriers usually run between $6 and $12, depending on the cost of your phone. You’ll also pay a deductible between $50 and $200 - again, depending on the cost of your phone. So while an insurance plan could save you money over the cost of a new phone, you’re still likely to pay anywhere between $300 and $400 to get your phone replaced under a carrier insurance plan.

Is $300 worth it for a refurbished phone that you might not even want?

From a third party (Squaretrade)

There are a few third party insurance companies dedicated to electronic devices, and chief among them is Squaretrade. Their plans are cheap - my iPhone 6 was given a quote for $5/month, cheaper than any of Verizon’s insurance options. Another perk: low deductibles. I was given a quote for a $75 deductible, over 50% lower than Verizon’s most expensive deductible.

Squaretrade does have one huge drawback, however: it only covers damage. If you lose your phone or it’s stolen, Squaretrade won’t cover you at all.

Negative reviews from around the web usually cite Squaretrade’s poor communication as their main complaint, usually leading to being without a phone for weeks or never receiving a reimbursement check.

There are other third party insurance companies, but they are too numerous and too small to list in full. If you’re looking at one of these other insurance companies, look at how much they’re charging you per month and their deductible to get a rough estimate of how much it would cost to replace your phone. Another tip: read the fine print. Carefully.

Renters or home insurance

If you already have a renters or home insurance policy, you may already have some sort of protection for your cell phone. These types of insurance are designed to cover theft and accidental destruction of personal property, both inside and outside of your residence. Since cell phones routinely cost $500+, most are covered by a renters or home insurance policy.

However, renters insurance and home insurance deductibles are high - usually between $500 and $1000, which can completely eliminate any refund from your insurance company.

Your insurance company may allow you to attach a rider (an additional special provision to your contract) to your policy that specifically covers your cell phone. In the case that your cell phone is stolen or destroyed in a covered accident, the rider would give you a full reimbursement of the device. You read that correctly: a full reimbursement, no deductible necessary.

Renters insurance policies are inexpensive, usually starting between $10 and $15 per month. For just a few more dollars than a typical cell phone insurance plan, renters insurance covers everything in your apartment.

Or just get a nice case

Our friend Clark Howard dislikes cell phone insurance policies, telling his readers to just buy a nice case instead. This doesn’t account for theft or loss, but cases are incredibly effective at reducing the damage of destructive accidents. Howard suggests Otterbox, a company well-known for their bulky protective cases and glass protectors. Even a cheap plastic case from a mall stand is better than nothing - I used a $4 case on my iPhone 5 for the entire life of the device, with dozens of drops never damaging the device.

Is cell phone insurance worth it?

There is no perfect cell phone insurance solution. We wish there was a product that covered everything - loss, theft, destruction, you name it - with a cheap premium and a low deductible that let you replace your phone with little to no hassle.

But even though there’s no perfect cell phone insurance product, it might be worth getting one of these imperfect solutions. Why? Well, think about going a full week without your cell phone. Most people will end up buying a new phone if their cell phone disappears or breaks, even if it doesn’t really fit into their budgets. Anything that can help mitigate that cost could be worth it, despite not being great insurance products.

Tell us your cell phone horror stories

Ever drop your phone in a toilet? Lose a phone in an Uber and have it end up in Japan? Break your phone and freak out in an Apple Store? Tell us your story in the comments.