Smartphone insurance is not worth the cost.
Smartphone insurance is available from manufacturers such as Apple or Samsung, wireless carriers, retailers, private companies and others. In general, paying for insurance is just not worth it. In fact, the reason that the plans are offered in the first place is that it creates another way for these companies to make money off their customers as insurance is profitable for those corporations offer it (meaning it is “unprofitable" for consumers which means a waste of money).
According to a study by Verizon as well as Consumer Reports, one in two phone users have never damaged or lost a phone. That means if those ~50% of the population paid for insurance, every dollar spent would have been a waste of money and a hit to their monthly budget. What would be a better option is to create your own “personal smartphone insurance” plan (see below).
The fact is while smartphones may get dropped all the time, they often do not get damaged as they are soundly built. People may drop them on the floor and rarely crack their screens or seriously damage the finish, or drop them into toilets and swimming pools, causing liquid damage. Sometimes, they lose their phones.
While about 50% of people never have issues, on the other hand if you are part of about 20% of the population who tend to cause damage to your phones fairly regularly or to lose them, you've probably thought about getting phone insurance. Before you invest in it, however, there are a few things that you should know about it as paying for insurance is generally a waste of money (unless you are in the 20% who tend to damage a phone). No matter what group you fall into, know that smartphone insurance isn't as straightforward as it may appear.
Smartphone insurance makes sense only if you're prone to frequent phone breakage or loss. Note read the fine print about loss as well, as some insurance companies do not pay out for lost or stolen smartphones.
The deductible and premiums could be nearly as much as you pay for a new phone
It costs about $30 to $40 a month for 24 – 30 to months to buy (technically lease) a new iPhone or Samsung phone. When you sign the lease to “buy” the phone, you may be tempted to pay an additional $15 to $20 a month for the carrier's insurance policy. Or you may be thinking of buying insurance from the retailer, such as Best Buy, or a third company provider.
If something were to happen to your phone say 7 months after you bought it, you would have already paid $100 to $150 in premiums. On top of the premiums, you would be expected to pay an insurance deductible worth about $200 to apply for a replacement phone. This means that after 7 months your total cost for a new smartphone (even with the insurance) would be $300 to $400 dollars, or a 1/3 to ½ the price of a new phone.
Apple's own AppleCare+ covers phone damage and theft, too. It costs about $99 a year and comes with a $29 deductible for broken screens, and a $99 deductible for other kinds of damage. If you lose your phone, the deductible is at least $199. Or there are also ways to get a free iPhone from the government for families who income is low enough.
Premium Care from Samsung is at least $12 per month with a $99 deductible. It does not cover lost phones, and there is also a replacement cost for it.
Smartphone insurance is expensive, both to buy, and to make use of when you need it to cover loss or theft. It's important to think about whether it's worth buying.
If you buy insurance, it doesn't have to be from the carrier
When wireless carriers offer smartphone insurance, they don't offer the coverage themselves. Instead, they contract with a third-party insurance provider like Asurion for behind-the-scenes coverage. If you are unhappy with the kind of coverage that one carrier provides and move to another carrier, they likely contract with the same insurance provider as your old carrier.
If you're unhappy with the insurance experience that a carrier or brand provides, it's a better idea to go with a third-party company. Companies like SquareTrade ($89 to $159 + a $99 deductible) offer smartphone insurance.
You have no control over the kind of coverage that you get
When you put in a claim after you lose a phone or damage it, you might expect that the insurance company will give you another phone of the same kind. The rules, however, say that the insurance provider isn't obligated to supply you with a new replacement, or even the same kind of product. They may give you a different phone, altogether, and it doesn't need to be new. Note most policies do not pay for lost or stolen cell phones.
This tends to be buried in the “fine print” of a contact. They can be page after page of legalese and language that may be difficult to understand. But the fact is these smartphone insurance contracts will often say the company that sold the policy can give you a used refurbished phone or even one from a different manufacturer.
There is a cap on the number of claims that you get to put in
If you're likely to lose or damage your phone often, insurance policies don't cover you very well. In most cases, these policies only cover you for one or two incidents a year. If you aren't accident-prone, these policies don't make much sense, anyway.
In addition, very few (if any) insurance plans pay out if the phone is lost or stolen. As if a company did do that, it could in some ways encourage fraud in the system. As sadly some people would just say “they lost their phone” in order to file a claim.
Is smartphone insurance worth the cost?
Generally, no. Think about if you are among the 50% of customers who never had an issue with their phones. If they bought a policy and spend say $200 per year, each and every year that is being wasted.
Even if you have broken a phone or cracked a screen, even then the math needs to be done. Even using the example above, if you cracked a screen or broke the phone after 7 months, it may cost you as much as $400 in total expenses (monthly premiums paid for 7 months + the deductible) for a replacement phone. And chances are you will get a gently used refurbished phone. Then consider you could probably buy your own refurbished phone online for similar cost to that.
Alternatives to smart phone insurance – personal savings/insurance
If you'd like to protect your investment in your phone, it makes more sense to start your own personal insurance policy. in other words, “self-insure”. All you need to do is to put $20 or so by every month towards possible damage or theft of your phone. If you need it, the money will be there for you. If you don't, you'll still have the money.
Another huge benefit here is for the 50% of people who never have lost or broke a phone. Think about this. If/when they want to upgrade or get a new phone, if they were saving $20 a month for say 36 months (3 years), when it comes time to upgrade they can use that cash they saved for their “personal” insurance policy ($720 total) and almost have enough to buy the phone outright. It is a form of forced, yet smart, savings.
Related Content From Needhelppayingbills.com
|
