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Add to FavoritesWhether or not to buy cell phone insurance is a decision that should be thought over before you go into the store to actually purchase your new phone. You should prepare questions for the sales associate to ensure you are properly informed. You might even research other insurance agencies before committing to the phone companies insurance. Insurance for your phone equipment is like any other insurance, it isn't necessary until you need it - then it's wonderful to have.
Most cell phone providers offer insurance with rates around $5 to $7 a month. This coverage usually has a deductible ranging from $50 to $100 depending on the individual phone. If your phone is discounted because you signed a contract, make sure you ask for the cost of the phone without the discount. You should add the total cost of insurance for the length of your contract, and then add the deductible price to that total. If your ending total is more than the cost of your phone, without a contract discount, then look for less expensive insurance. After all you don't ever want to spend more for insurance than the equipment is worth.
Some cell phone equipment comes with a free warranty. You might reason that free warrant replaces insurance. You should make sure to ask for detailed information of coverage before deciding. Most manufacturers don't cover water damage or physical damage to the equipment. If you plan to rely only on the warranty then make sure you understand what voids the warranty before you need to file for a replacement. For instance, if your phone stops receiving text the warranty should cover that, but not if you have a crack on the screen or a dent on the phone. Even if the physical damage is only superficial and couldn't cause the text issue, your warranty might still be void due to physical damage. Also, sometimes the warranty runs out before your contract ends, so you might revisit the insurance idea to keep some coverage for the remainder of your contract.
Also, it's worth your time to ask your auto insurance company if they cover cell phones. Some large insurance agencies do offer cell phone insurance at a less expensive rate than actual phone companies. Most agencies require that you already have insurance with their business. Some expect you to have other recreational items listed with their company, such as boats or motorcycles. It only takes asking to know for sure, and the savings can be substantial. Some of my research found that $20 a year could supply me with great cell phone coverage with no deductible. I wasn't even limited to the same type of phone with a claim, not so with most cell phone companies. That insurance is definitely worth the money.
Cell phone insurance is worth while if it helps save you money and aggravation. Today the majority of our nation depends on cell phone communication and it's very inconvenient to be left without a phone. If your phone is used for your business or your only source for the internet, then you need to think about insurance for you equipment. But think it through, and don't settle for less coverage at a higher price.
Some people seem to be accident prone or at least "unlucky" with their precious cell phones, and buying several phones a year can be torture for the pocket book. The average cost of a new cell phone is between $270 and $700 depending on the phone and its features. Insurance can benefit the people that have lost one, drowned one, dropped one, or had one stolen. If these things seem to happen to you a lot, then insurance will defiantly be a good investment for you. Remember that our cell phones are more than just a phone now days. They are our MP3 players, digital cameras, video cameras, calendars, mini computers, organizers, watches, and more.
Learn more about this author, Tena Kight.
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No
You find yourself sitting (or standing) in your local cell phone office purchasing a new phone.
"Do you want to purchase equipment insurance for this phone?" will be the inevitable question asked by the representative handling your transaction. "It will cover loss, theft, and damage," will be the response to your question on what it is for. They try to make it sound like a very "good deal."
However, they will often neglect to disclose the finer details. Instead, they should provide you a small print booklet to read (who reads these before they need it?)
Damages caused by misuse may not be covered. How can you misuse a cell phone? Dropping (even accidentally) in water, slipping out of your hand and falling onto concrete, sliding off the dashboard and out the window may not be covered. Damages they attribute to misuse may or may not be covered. Read this fine print so you understand exactly what is allowed.
Misuse, this is a catch-all term they use. Did you know that even if your phone has a difficult charger to connect, using a tiny, fragile plug; damaging this plug during the normal course of connecting for charging may be considered abuse? It can and may result in denial of claims based on your policy's guidelines.
"How will they know if my phone has water damage?" This is a very easy determination for them. Both your cell phone and the battery have indicators that will change color if exposed to water. Beware, though; these can also change color if exposed to very high humidity (such as that from a bathroom during a very hot shower).
Somewhere, usually in the battery compartment is a white dot, white square, or white/red striped (or patterned) decal. If this changes color, you may not be covered and drying it out will not change the color back to original. Watch when you go to a store with claims of non-working phone. One of the first things they do, if not the first, is to pop the battery cover off and check these moisture indicators. Why; if you have moisture damage, they are not obligated to continue troubleshooting and they will switch to trying to sell you a new phone.
READ the policy to ensure you know what is covered and what will not before you have the need to file a claim. If you receive updated documents, read those as well as companies may remove certain types of claims that were previously covered under the old policy. Ignorance of policy changes will not get you a replacement phone, should the need arise.
"For only $4.99 (the typical premium payment for this service) you get your phone replaced if it is lost or stolen."
However, many times this is not entirely the case. What is usually omitted in this conversation are the details.
For example, my cell phone company offers a choice between two plans. The choice is based on the type of phone you have, not on different levels of coverage. Some companies do offer different coverage options.
Each month, you pay your fee as part of your cell phone service bill. One day, your phone is lost or stolen (or damaged that may or may not be covered). You contact your cell phone company who directs you to the cell phone insurer or they may handle the claim themselves.
If they approve your claim and you pay the deductible, they will send what they consider an "acceptable" replacement cell phone.
For my plan, I have a Blackberry phone. In addition to my $95 deductible I also have to pay a processing fee of $50 to get a replacement telephone. This replacement is not a NEW phone; it is a "refurbished" phone.
Refurbished does not always mean, like-new. It means it will function as a phone and "should" perform without issues.
Compute the value. $95 + $50 just to file the claim = $145. If you have had this phone for two years paying this $4.99 fee each month = $119.77 or a total of $264.77 just to get a replacement phone that cost me originally $300!
What many do not consider, is this is the price you pay for a "REFURBISHED" phone. Not a new phone, not a "like-new" phone. I have seen many refurbished phones in horrid shape that should not be sent out as "acceptable" replacements.
Let's look at the term "refurbished." What exactly does this mean? Typically a refurbished phone should have all functions of the new phone. However, phones with backlit buttons may not have the bright intensity of a newer phone. Buttons on the phone may not be as limber as your old phone. Some buttons may "stick" slightly. The display may not be as bright, either.
The battery may not be new, may not hold a charge for as long as your prior phone's battery. Contact may not be tight which could cause intermittent loss of your phone. Should phones in such conditions be considered "acceptable replacements?" Not to the customer receiving one, but to the insurer they are fully acceptable.
However, look at this on a different scale. You buy a phone that you pay $90 for (as well as sign a contract for this lower price). If you have to file a claim, you have to pay your $50 minimum (plus the monthly fee) as a "processing/deductib le" fee. That is more than half the price of the phone!
The phone you get may be substandard, yet you almost paid full price for it (when factoring in the monthly fees for the coverage). In some cases you may not get the exact same model which would mean any chargers and spare batteries may not be compatible with your replacement model. In many cases, you may be paying more for the insurance and deductible than you paid for the phone to begin with!
How does it make sense to purchase this "insurance?" You may be covered under other policies such as auto or home insurance if theft occurs from either of these two locations. You may have to file police reports before you can complete your claim and receive a replacement unit.
In addition, your policy may limit you to a predetermined number of claims in a set period. If you frequently misplace your phone, you may find after the second claim you are not covered, even though you have paid the premiums.
In 2007, the three major cell phone insurers were hit with a class action lawsuit alleging they did not disclose how the insuring process would work for the customer sufficiently to allow customers to make informed decisions on whether to purchase this extra service or not.
They fail to disclose up front the deductible and that the replacement phone will most likely be a refurbished phone of lesser value than the phone lost. The refurbished phone will be what the insurer considers "acceptable" but the customer may not be happy with at all.
The bottom line: exercise extreme caution with your cell phone. Take care to not "leave" it in shopping carts or other areas where loss can occur. Do not use your phone if you cannot maintain a tight hold on it (or use a hands free device) to prevent accidental dropping.
If you can maintain tight control of your phone, forgo the insurance and put the premium payment you save in an account for use if the need arises to replace your phone.
Learn more about this author, B. L. Babb.
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