Money Talks, So Should You

Is it worth it: Cell phone insurance

Clint Williams
by Clint Williams, Dimespring Contributor

Not much bigger than a bar of soap, today’s smartphones have more computing power than the command modules of the Apollo missions that took men to the moon and back. The current crop of smartphones talk, text, game, Google and stream video.

Many people can’t imagine life without one. But can you live without cell phone insurance?

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The issue

More than 95 million people insure their handsets through Asurion, the cell phone protection company used by every major wireless carrier.

July, especially the Fourth of July holiday, is a dangerous time for mobile phones, according to Asurion's 2011 data. More claims are filed in July than any other month, particularly for water damage claims. June and August aren’t far behind.

The breakdown

Cell phone insurance premiums range from $4 to $8 a month. While policy details may vary — it’s important to read the fine print — cell phone insurance typically will replace your lost, stolen, or damaged phone with a repaired, refurbished one.

You also have to meet a deductible that typically rises with the sophistication of your handset. For example, in the Total Equipment Coverage plan offered by Verizon and backed by Asurion, the deductible for a flip phone is $45 and $99 for advanced devices. But if you have an iPhone 4S, the deductible is $169 to $199, depending on how much memory your gadget packs.

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How likely are you to file a claim? Not very, according to a survey by “Consumer Reports” that found just 17 percent of buyers polled got a new phone because the old one broke, and only 3 percent because the phone was lost or stolen.

The verdict

While replacing a smartphone might cost $500 or more, the loss of a stolen cell phone may already be covered under your homeowner’s or renter’s insurance. The fairly high deductible means you aren’t getting as much coverage as you think.

You’re likely better off passing on this insurance and, as many experts recommend, keeping your old phone in a desk drawer. If you lose the new phone, reactivate the old one and use it until you qualify for a subsidized smartphone.

 

Clint Williams is an Arizona-based freelancer for DImespring. He has written for the Arizona Republic and the Atlanta Journal-Constitution.