Phone insurance can cost anywhere from a few dollars to $13+ a month, which sounds cheap but when you do the math you might end up paying more for phone insurance than it’s worth.
In fact, according to Logan Abbott, the president of Wirefly (an online shopping comparison tool for cell phone plans), “95% or more of the time, cell phone insurance is not worth buying.”
Different Types Of Smartphone Insurance
There are different places you can purchase insurance for your device, including through your wireless carrier, the creator of your smartphone or a third-party source, such as SquareTrade.
Insurance offered through wireless carriers tends to offer the most applicable discounts. While third party sources typically only cover malfunction and damage and range around $7 per month.
For comparison purposes, Verizon has four different insurance options, ranging from $3 to $11 per month. The nicer/newer your phone is the more expensive your deductible.
While insurance from Verizon and Square Trade cost about the same, you are going to get better coverage from Verizon in the case you lose your phone or it is stolen.
The Biggest Surprise About Smartphone Insurance
People sign up for insurance thinking, what’s $10 extra per month?
They pay their bill each month assuming they are covered 100% in the case something happens to their device. Think again.
The biggest surprise is that there is still a hefty deductible you must pay for replacement devices and repairs, no matter where you buy your insurance.
These deductibles are often uncomfortably close to the retail cost of repairs. So by the time you factor in your monthly insurance payment, you might be in the hole.
If your phone is broken beyond repair, stolen or lost, you are promised a new phone with insurance.
But, there’s a deductible for that and you are not guaranteed the same exact device that you had before.
In some cases you may end up with a different make and model, and more often than not the replacement device is refurbished.
If the value of your device is in the toilet, you might get next to nothing back on it, despite the fact you’ve been forking over money every month for insurance.
A Breakdown Of Insurance Costs Using AT&T As An Example
AT&T’s prices are middle of the road, so we are going to use them as an example.
They offer three different insurance policies for smartphones, starting at $7.99 per month and going up to $29.99 per month for multiple devices on the same plan.
The $7.99 plan protects your tablet or smartphone from theft, loss, physical and liquid damages, and device malfunctions that are no longer covered under the standard one-year warranty.
With this plan you can save 25-50% off the replacement deductible, but only if you have not made a claim in the last 6 months.
The $10.99 plan protects you against all of the above, with the addition of “one-tap access to ProTech support” and the Protect Plus app, which comes with 50GB of secure content storage.
Finally, the $29.99 plan offers all of the above plus the option to add other devices onto your plan. Basically this is for family accounts with more than one number attached to the line.
Let’s say you crack your screen and you are covered by AT&T’s basic $7.99 per month insurance, which totals $95.88 per year.
If your screen shatters and AT&T decides to give you a 50% discount on repairs, you’ll end up paying $44.50.
This may sound like a good deal, but don’t forget all of the money you’ve spent on insurance.
If you make just one claim within the year (and you can really only make 2–and they have to be well planned out at 6-months apart),
you are really paying $140.38 to fix your screen. This is more than you’re going to pay to have your screen replaced without insurance.
If you break your phone a lot it might pay off… until you remember that you don’t receive much of a break on repairs or replacement devices unless you’ve made no claims in the last 6 months.
If you make 2 accepted claims in one year, there’s a chance that phone insurance could pan out.
If you don’t make 2 perfectly timed out claims, or your phone breaks within 3 months of repairs, you’re more than likely overpaying for phone insurance.
The Best Time To Have Smartphone Insurance: If Your Phone Is Lost Or Stolen
That’s not to say you won’t ever be relieved to have insurance.
If your phone is stolen and you need a completely new device, you might not even be able to afford a replacement device without insurance.
BUT you’ll still have to pay for your replacement device, even with insurance.
The deductible with insurance is generally something around 25-50% less, so long as you have not made a claim in the last 6 months.
The Final Consensus: Should You Get Phone Insurance?
Insurance can give you peace of mind, but when you go to make a claim you might be rather surprised at how little smartphone insurance actually pays for.
Most phones come with a limited one-year warranty, and the average person only keeps their phone for around 2 years.
Let’s say you pay $7.99 a month for phone insurance, $95.88 a year, and just under $200 over the course of 2 years.
If your phone is stolen during this time and you need a replacement device, you still have to pay a $100-$200 deductible to get a new phone—that means you’ve paid nearly $300, and let’s be real, you can easily find a replacement device for $300.
We recommend saving the money you’d spend on insurance in your bank account, and then using that money to fund repairs on your own.