Is Cell Phone Insurance Worth it?

It’s a phone owner’s worst nightmare: Your expensive device tumbles to the sidewalk or kitchen floor with an awful crack.

You pick it up, and disappointment hits. The screen is covered with a delicate web of fissures. What’s worse, the phone keeps blinking when you try to use it.

In this situation, you’d probably be glad to have cell phone insurance from your wireless carrier. But there are pros and cons to phone insurance. One school of thought is that phone insurance is the con. Many believe carriers play on owners’ fears without offering clear information about actual costs, or by providing a replacement phone rather than a new one.

The buzz on phone insurance

Consumer Reports surveyed 5,200 people who had at least one phone in their household. About half of the respondents reported having at least one major phone accident.

Sounds like a pretty good reason to get phone insurance, right? After all, coverage offers to repair or replace your device when it gets dropped, run over or falls into the toilet (which happens more often than anyone would like).

There are two basic ways to get your phone insured. One is through your wireless carrier as a fee added to your monthly bill. The other is through a third-party subscription service. Whichever type of coverage you purchase, most mobile phone insurance covers:

• Liquid damage
• Loss of the phone
• Mechanical defects after the warranty has ended
• Physical damage (such as cracks to the screen from being dropped)
• Theft

You can expect to pay anywhere from $100 to $200 each year for coverage. Then you’ll have to meet a deductible if you file a claim. Depending on your device, the deductible could be anywhere from $50 to $300.

To add insult to injury, you may receive a refurbished replacement phone instead of a new one.

You may already be covered

Standard homeowners and renters policies cover belongings inside your residence, including your phone. If your beloved cellphone was stolen from your home or damaged in a fire, it would be covered. Similarly, if your phone was stolen from your vehicle, your homeowners or renters policy would likely provide at least some coverage. Take a look at your auto insurance policy because some carriers also provide benefits.

However, you'll need to weigh the value of your phone against the amount of your deductible to decide whether it's worth submitting a claim to your insurance company. Talk to your insurance professional about the details of your coverage.

Also, note that your homeowners or renters policy can't help if you simply lose or misplace your phone. In that situation, you'd be out of luck.

What else can you do?

Protecting your phone isn’t something to take lightly. It’s important to cover your costly device against theft, loss or damage. These options may be worth considering:

• Get a good phone case. Many of today’s protective cases are designed to withstand rough treatment. Check online for discounts on these cases and screen protectors. Even if you pay full price, a good phone case is still one of the cheapest ways to protect your phone.
• Consider no-cost phone insurance from a credit card. If you pay your monthly phone bill with a credit card, some offer free cellphone protection. Do your due diligence and check your card benefits. It could save you hundreds of dollars every year.
• See how you fare with repairs. Local mobile phone repair shops are popping up everywhere. Instead of paying a deductible to get a cracked screen fixed, you may find yourself paying less at a reputable phone repair store. Some experts estimate costs to be around $99 to $150. If you were to pay for insurance, you could be paying that much for the deductible alone, possibly without a guarantee that you’d begetting a new phone instead of a refurbished one.
• Figure out location tracking. If you are prone to misplacing your phone, get an app that reveals its location (before you lose it again). This functionality may already be built in to your device; check with your manufacturer.

Phone insurance from your wireless carrier isn’t necessarily a bad idea, but you have other options. If you choose phone insurance, the smartest thing you can do is carefully read through the insurance limitations and restrictions. That way, you’ll know what to expect if the worst happens.