How Smart is Smartphone Insurance?

By Catherine Powell

Image courtesy flickr

Whether you're a Millennial or a Baby Boomer, one thing is certain; You never leave home without your smartphone.  Part communication device, part entertainment center, part research assistant, a smartphone puts the world at your fingertips.  You can read a book, watch a TV show or a movie, order a pizza or a taxi and converse with your friends and family six ways from Sunday wherever and whenever you choose.  If it did the dishes and the laundry, you’d probably marry it, right?  That’s why you can’t afford to be without your little oblong friend.  While the model I carry retails for around $100, this is considered the low end of the smartphone pool.  Springing for a Samsung Galaxy S10 will set you back $700, while an iPhone can cost more than a grand.  With prices like those, it should come as no surprise that I’m asked about smartphone insurance from time to time by my customers.  To keep from repeating myself, I created a handy blog that will gives you the ins and outs you need to consider before deciding to buying an extended warranty or insurance for your phone.

1.      Should you buy protection at the store when you buy the phone? – There isn’t a big box store, cellphone store or online smartphone purveyor that doesn’t offer some form of protection plan over and above that of the manufacturer.  Whether you should bite the bullet and take them up on their offer depends on several pertinent factors.  Number one is the cost and what you get for your money.    Some plans include repairs, loss and theft, while others have restrictions.  Before you sign up, make sure you read the warranty information to see what's covered and what isn't.  Also read the fine print to check on things like deductibles, limits and exclusions that pertain to your make and model. Number two is your probability of needing insurance.  Depending on how hard you are on your phone, you should decide whether or not to opt for extra coverage.  If you only buy the base model like I do, you don’t have to sweat the warranty since it costs nearly as much as a new phone. (I’m on my third Android smartphone in 10-years and I have yet to dent, crack, destroy, or lose my phone due to either negligence or theft.  Go figure.)

Image courtesy flickr

2.      What’s the downside if I don’t protect my phone? – That depends on the type of phone you own and the kind of damage you do to it.  To swap out a cracked screen can range anywhere from $145 on an iPhone 8 to $277 on a Galaxy S10.  Drop your smartphone in the drink or lose it altogether and you could be out the cost of the unit.  If that should happen, the $129 for a 2-year iPhone warranty or $11.99 a month for Samsung Premium Care might not sound so bad.  Other makes and models of smartphones offer extended warranties of their own.  But the criterion for purchasing one  comes down to the probability of needing it.  (If you have young children, the likelihood of damaging your phone increases by 80%.)

3.      Does your homeowner’s or renter’s policy make adding an extended warranty redundant? – The answer is yes and no.  It’s yes if your smartphone is stolen, destroyed in a fire or due to a covered peril listed on your policy.  On the other hand, if the loss or damage to your smartphone falls outside the purview of your policy, forget about it.  Add to it any claim on your homeowner’s or renter’s policy will require you to exceed your deductible, and odds are relying on these policies to make you whole again probably isn’t going to be your best bet from a dollar and cents perspective.  Add to it that most homeowner’s and renter’s policies exclude things like shattered screens and lost phones.  

4.      What’s the bottom line? – Here’s what Digital Trends has to say about smartphone insurance:

When it comes to smartphones, extra-cost insurance or warranties may seem like sensible protection for the day your phone breaks or leaves you unexpectedly, but neither tends to pay off.  Consumer polling indicated only 15 percent of buyers had acquired a new phone because the old one broke. Monthly insurance premiums for smartphones are typically $10 or more, with deductibles well north of $100. Skip the extended warranties, as well. They have similarly high up-front costs and service deductibles.” 

Image courtesy flickr

5.      An Apple a day? – There’s always an exception to the rule, isn’t there?  One of the exceptions would be for iPhone owners who are likely to need support after the initial 90-days.  If that’s the case, then you may wish to consider Apple’s extended warranty/service plan.  If you have an Apple-savvy child, coworker or significant other, skip the added cost.

6.      What should you do? – Unless you have kids, teach grade school or work in an environment that’s likely to cause you to drop your phone frequently, it’s probably not smart to opt for smartphone insurance.

Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida.  To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com/