Cell Phone Insurance: Scam or Smart?

Posted on 10/24/2013

Bad things can happen to good phones. They fall in toilets. Toddlers smash them against tile floors. They're left behind in taxi cabs. Experts say as many as 80 million phones are lost, stolen or damaged each year. And when you need a new one that phone you got such a great deal on suddenly becomes extremely expensive to fix or replace. But is paying for phone insurance a good idea? Or is it just a waste of your hard earned money?

Cost of Insurance or Extended Warranties
So how much will you pay for cell phone insurance or extended warranties? It depends on the carrier. Verizon recently upped their monthly fees by a buck so those who sign up pay $3-$10 a month. And experts say that pretty typical for most carriers.

Paying Deductibles
Just like with other forms of insurance, there is often a deductible with cell phone insurance. If you've got an iPhone and paid $100 for extended Apple Care coverage that doesn't mean you will get a free replacement phone if yours breaks. You'll still have to pay at least $169 to meet your deductible.

Try Third Party Repair
On the other hand, if you crack your screen or need another fairly standard repair you'll likely get charged a premium at the official cell phone store. But if you go to a third party repair shop you can expect to pay anywhere from $50 to $150 for most issues. Stores like these are popping up more and more, especially ones that focus on the most popular iPhone and Android models.

Secondhand Phones
If you're caught without insurance and you need a new phone before you're eligible for the upgrade discount you may also be able to find a used replacement at a much cheaper price. Check Craigslist, eBay, and sites like Glyde. Glyde.com currently has iPhone 5s in excellent condition for $312.

Third Party Provider
When buying insurance from your cell phone provider you typically must do it within 14 days of purchasing a new phone. But what if you decide later on you want coverage? You may want to consider a third-party provider. Some to check out include ProtectYourBubble.com, Mobile-Rhino.com, and ensquared.com.

Homeowners Insurance
If you have homeowners insurance and your phone is stolen you may be able to file a claim. Depending on your policy, your phone may fall under the protection of your homeowners insurance which could help you decide whether to purchase cell phone insurance as well.

By Alison Storm

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