Is Cell Phone Insurance Worth the Cost?

Is Cell Phone Insurance Worth the Cost?Is cell phone insurance worth the cost?  Maybe not.

First a story.  The winter of 2014/2015 was a brutal one here in New Jersey.  It stuck with us until mid April.  Seemed like it wouldn’t end.  My driveway was a sheet of ice most of the winter.  Here in the northeast, we all are familiar with a term called black ice.  This is a condition where a thin transparent layer of ice covers your driveway or the roadway.  You aren’t aware of it since its invisible.  You only become aware of it when you walk or drive over it.  A clear weekday morning in New Jersey reminded me of why i hate black ice.  Walking out to my car in the middle of the winter resulted in a cartoon like fall where I went in mid-air and landed right smack on my iPhone.  This resulted in two unfortunate events.  First my back had a bruise that covered the entire lower part of my back and crippled me pretty good for two days.  The second, and more costly result, was that my trusty Apple iPhone now had a curve in it.  Turns out I landed right on my iPhone.

My iPhone was broken.  Couldn’t turn it on.  Took it to the carrier that explained to me that I likely bent the motherboard and I needed to replace it.  I didn’t have insurance at the time and learned the hard way that a new one wasn’t $99 but closer to $599.  I needed a phone so paid up and now go out of the way to avoid black ice at all costs.  I wished I had insurance and promised myself to look into it.  I asked the guy at the store what the cost would be if I had insurance.  The answer was the policy was $6.99 month.  What he didn’t bother to tell me is that there’s a $199 deductible that I would have to pay towards a new phone.

An acquaintance recently dropped their iPhone 6 Plus and cracked their lens.  No problem, they told me they had insurance and this was covered.  It turns out they were right but it didn’t go down the way they thought.  Turns out there’s a deductible of $169 plus a long wait for them to send the phone out to be fixed.  This means that you will pay the first $169 of the expense to repair your phone with insurance picking up the rest.  This person was surprised to hear about the deductible and she shopped around a little to find the Apple Store would repair her phone for $109 and will do it while she waited.  So the Apple Store was cheaper than the deductible of her insurance.  So she was out $109 plus the cost of her insurance which it turned out she couldn’t use because of the high deductible.

So is insurance worth it?  On lower priced phones, it’s not as it would be more cost-effective to simply buy a replacement on a site such as eBay.  If your phone is one of the pre-paid models, I would also avoid the insurance because when you factor the deductible in, it will likely cost you more than buying  a new phone.

For more expensive phones, it might make some sense during the first year or two.  Most carriers subsidize a new phone every 12-24 months which is going to be less than the cost of the deductible.  So if you are prone to losing or breaking your phone, and it’s expensive, you might consider the insurance then drop it after the carrier time period for a new subsidized phone arrives.

Keep in mind the policy may not be worth invoking if the phone has suffered from broken glass or a broke button.  The cost to repair it from a third policy will often be less than the pricey deductible.