a blog about Nokia phones, S60, and the wireless industry

Is Cell Phone Insurance Worth It?

November 7, 2008

A recent post by Jill at SquareTrade got me thinking about something I usually don’t: cell phone protection plans. I’ve never considered these plans and I’m pretty sure I never will. But I tend to baby my cell phone. And most people don’t…

Each of the Big Four phone carriers has some sort of cell phone insurance plan. Basically, you pay a set fee each month, and a deductible when the unthinkable happens. You then get a new/refurb phone, and everyone’s happy, right? Not necessarily, if you look at your actual cost for the replacement.

So let’s say you were six months into your contract and you lose your phone. Factoring in monthly costs and the deductible, it would end up costing you:

Verizon: $4.99 per month * 6 months + $50 deductible = $79.94
“Asurion may fulfill claims with new or refurbished equipment. In general, claims are fulfilled with the same make and model you claim. If this is not possible, a like-kind make and model will be substituted. Color, feature and accessory compatibility are not guaranteed.”

T-mobile: $4.79 per month * 6 months + ($40 or $90 or $130 deductible) = $68.74 or $118.74 or $158.74
“Receiving a replacement phone? Your replacement device may be new or remanufactured.”
Basically the highest-end smartphones such as the G1 have a deductible of $130, middle-tier and up is $90, and the bottom of the barrel phones (RAZR v3) are $40. Seems like most phones (naturally) fall into the middle-tier category.

AT&T: $4.99 per month * 6 months + ($50 or $125 deductible) = $79.94 or $154.94
“Claims may be fulfilled with new or refurbished replacement equipment. Phone color, brand, model and features may be different and accessory compatibility is not guaranteed.”
Highest tier smartphones (newer Blackberries, AT&T Tilt, etc) are $125 while everything else (even smartphones like the Blackjack II) are $50.

Sprint: $4 per month * 6 months + $50 deductible = $74.
“Replacement equipment may be the same or comparable equipment—like kind or quality—with similar features as your original equipment.”
Cheapest of the bunch, and you can also submit 3 claims a year vs the 2 for everyone else.

So the bottom line is that the protection plans ain’t cheap.

In the midst of my digging, I discovered that the same company, Asurion, handles all the phone claims for these four companies. It’s pretty interesting how the prices can vary pretty widely – who would’ve expected that Sprint would have the absolute cheapest cell phone protection plan, anyway? (at least out of the phone carriers)

There are always other options, however. As Jill mentioned, you could go with a third-party protection plan (SquareTrade), which would run you $4 a month + $50 deductible for accidental damage = $24 or $74 in six months, depending on whether you lost your phone or dropped it down the toilet. Although one nice benefit is that you won’t get a refurb back. (side note: I haven’t used SquareTrade’s service, nor am I endorsing it or any other carrier’s insurance plans)

And of course there’s always Best Buy (depends on the price of the phone, a rough estimate would be around $40-50 bucks for 2 years coverage), Circuit City, and the other fun retailers. Actually, on second thought, maybe not Circuit City.

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