A guide to cell phone insurance
Summary: Do you really need cell phone insurance? How is it different from a warranty? Read on to have your questions answered.
Whether you're purchasing it outright or locking yourself into a contract, a cell phone can be an expensive investment. And taking into account its value, the frequency with which you'll use it and how relatively fragile it is compared with the old-school brick phones that preceded smartphone technology, it's something that can be easily damaged, lost or stolen - and all of these events can prove as costly as they are stressful.
However, depending on how you buy your phone and if you go through one of the major providers, there are options for protecting your device (and your wallet) against any of the above unfortunate events. Manufacturers provide a complimentary warranty (and additional extended warranties are available to purchase), and all of the big carriers offer phone insurance, either as an add-on to your monthly plan cost when you sign up or to be bought separately if you decide you'll need it down the track.
The purpose of buying insurance is to protect against the things that a manufacturer’s warranty does not. While warranty will cover you for mechanical breakdowns and faults, it’s of no help if – like so many of us – you accidentally damage your device. Likewise, if you suffer the misfortune of losing your phone or, worse still, having it stolen, you’ll be on your own. Insurance is always an optional additional purchase, but it exists to give you peace of mind against these not necessarily likely, but definitely possible, mishaps.
What insurance covers (usually):
- Accidental damage including drops, cracks, liquid spills, liquid submersion, any damage caused by accident.
- Mechanical and electronic failures, if your manufacturer’s warranty has expired and the failure would have been covered under this warranty.
- Loss or theft of your phone.
You have two options if you decide cell phone insurance is worth the investment – either taking out a policy through your cell phone carrier when you buy a phone (which usually needs to be done within 30 days of purchase), or through an independent company unrelated to your cell network.
All of the big carriers – Sprint, AT&T, Verizon Wireless, and T-Mobile – offer what’s basically the same insurance under different names, through insurance company Asurion. Asurion insure approximately 20% of cell phone users through the policies they administer for carriers.
Verizon Wireless Total Equipment Coverage
- $9 per month for cell phones, $7 per month for tablets.
- Provides comprehensive coverage for loss, theft, damage (including liquid damage) and mechanical or electrical defaults after the manufacturer’s warranty expires.
- Non-refundable deductible is up to $199 per approved claim for phones
- Two replacement phones allowed per 12 month period, with an equipment maximum of $1500 per claim.
AT&T Mobile Insurance
- $6.99 per month.
- Provides coverage for theft, loss, accidental damage and out-of-warranty malfunction.
- Policy covers the phone itself, standard battery, standard battery charger and SIM card.
- A non-refundable deductible of up to $199 applies, depending on the device.
- Two claims allowed within any 12 month period, with a maximum device value of $1500 per claim.
Sprint Total Equipment Protection
- $9 per month or $11 per month for high-end devices.
- Provides coverage for loss, theft or damage (including liquid damage).
- Deductible of up to $200 depending on the device will be charged per claim.
- A maximum of three replacements or repairs within any 12 month period, with a limit of $1500 per claim.
T-Mobile Premium Handset Protection
- $8 per month.
- Covers in the event of loss, theft and accidental damage as well as mechanical breakdown.
- A non-refundable deductible will be charged per claim, of up to $175 for high-end smartphones.
- Maximum of 2 claims within a 12 month period, with a maximum of $1500 per claim.
- Coverage must be taken out within 14 days of purchase.
NOTE: If you purchase your device through T-Mobile's JUMP! early upgrade plan, Premium Handset Protection and Lookout Mobile Security Premium are included as part of the $10 monthly JUMP! fee.
Insurance through third-party providers is similar, but there are often key differences. The good thing about insuring with outside companies is that you can sign up at any time after purchasing your device, so long as it is 100% functional with no prior damage or defects. Many of them also offer a cash reimbursement option for your damaged phone instead of either replacement or repair.
Strangely enough, you may also find that policies offered by other companies instead cover incidental issues that Asurion does not, such as display failures, issues with your antenna or wireless connection, or touchscreen failures.
As with manufacturer’s warranties, personalized data – such as contacts, music, video, and customized software – isn’t covered.
Things to keep in mind:
- Most carrier insurers will either repair or replace. You will not get a new phone, rather a ‘refurbished’ one – there are various reports of customers receiving malfunctioning second-hand phones. Some other insurers may offer you a cash payment for the replacement value of your device instead.
- You will not be covered for pre-existing problems, issues relating solely to software or data, damage caused intentionally or through recklessness, acts of nature, routine wear and tear, or if the equipment appears to have been dismantled or repaired without authorization.
- If you take out insurance through your carrier, it will generally be added on to your monthly cell phone bill.
- Before buying individual cell phone insurance, check that you don’t already have existing coverage elsewhere. Renters or homeowners insurance may cover your phone already without you needing any additional protection.
Is insurance worth it?
One of the big drawbacks about purchasing cell phone insurance is that you won't receive a new phone if your claim is approved, and your old device is beyond repair. Instead, you'll be sent a 'refurbished', pre-owned device that may not even be the same model as your previous phone.
Most of the terms and conditions for insurance state that replacement equipment will be the same or a 'comparable model with similar features' as your unusable device. Although refurbished phones are supposedly quality tested and in full working order, consider whether you'd be satisfied with what is essentially a second-hand replacement.
Next, you'll need to consider the likelihood of ever actually making a claim anyway. If you're someone who is prone to losing or damaging your phone, work in a high-risk environment, have small children, or live in an area susceptible to break-ins, then insurance may be worth considering.
Also, remember that it's up to your insurance provider as to whether or not your claim will be approved. Insurance doesn't cover normal wear and tear, or 'cosmetic issues' that don't affect the phone's ability to function.
Realistically, it may just be cheaper and easier overall to buy a second hand cell phone with the money you didn't spend on insurance, rather than fork out monthly and get a used phone anyway if something goes wrong; take the money you would be adding to your phone bill each month and put it aside in a separate bank account in case of cell phone emergency.
Most cell phones and electronic devices carry a one to two-year manufacturer’s warranty, valid from the date of product purchase. Legally, you should be able to read the details of a warranty before you make a purchase. The protection offered by written warranties can vary, so it’s important to check just which parts and problems are covered and which ones are not.
Warranties, unlike insurance, cover against mechanical faults and failures that are not caused by the device owner. If your device breaks down through no fault of your own and you’re within the warranty period, you are entitled to a repair or replacement for your phone. However, the warranty doesn’t cover accidental damage, theft or loss (which is where insurance comes in). A manufacturer's warranty is also unlikely to cover any consequential damage caused, such as time and expense spent to get the product repaired.
Luckily, warranties will usually cover software issues – so problems like your device crashing or freezing should be faults that your manufacturer can take a look at. Fixing software problems will require restoring your phone to factory defaults, so it’s essential to back up your data before you send a device away for repair, so you can restore it once your phone is returned (or if you are sent a replacement phone instead). Personal data, downloads and customized software aren't covered and will be wiped from your device if repairs are required.
Things to watch out for
There are certain unfortunate occurrences that may cause your warranty to become void. Getting your phone wet will usually cause the warranty to be revoked – most phones have a moistness indicator under the back cover, so if it shows your phone has come into contact with water, you could be out of warranty.
If you unlock your phone from its network through your phone carrier, it’s considered an ‘official’ unlock and shouldn’t void the warranty. Doing it yourself or through an unofficial retailer, however, most likely will. Cell phones often come with tamper seals inside the back cover, which if broken indicate if your phone has had repairs done by an unofficial repair centre, or been tampered with.
So if an authorised repair centre determines that your phone has been opened up and tinkered with by an unapproved party, your warranty becomes void. The same applies if you jailbreak or root your device, as it’s a violation of the terms and conditions of your warranty. If your device becomes faulty from installing custom software or firmware, too bad – you’re on your own.
In addition to a written warranty, all products are covered by ‘implied warranties’ which are created by state law. Basically, these are a promise from a seller that the product you buy does what it’s supposed to do with all the advertised features. The product should be fit for purpose with no faults or defects.
Even though new a new phone comes with a written warranty, it will still be covered by an implied warranty as well. If issues arise that don’t fall under the written warranty, but occur through no fault of your own, you should look into the protection given by the implied warranty by contacting your local consumer protection office or the Federal Trade Commission.
When purchasing your phone, you may be presented with the option of extending the included manufacturer’s warranty for a fee. Extended warranties will usually offer another 12 months to 2 years of protection against malfunction and failure, on top of the time covered by the original warranty.
By choosing to pay to extend your phone’s warranty coverage, you won’t be buying any additional protection or benefits, simply more time in which your phone manufacturer will repair or replace your device if there’s a breakdown.
Check your credit card
Before you sign up, we recommend first checking that you‘re not already eligible for free extended coverage simply through using your credit card. For most major cards, if you charge an eligible purchase with a manufacturer’s warranty of less than 3 - 5 years to your card, the terms of the warranty will automatically be extended for up to one additional year.
The benefits of a credit card extended warranty can vary according to the card type and issuing financial institution (premium cardholders may find themselves having access to more features than a customer with a basic credit card). Cardholders generally don't have to sign up ahead of time to qualify for the protection, but may have to provide evidence of purchase such as receipts or a copy of the original manufacturer's warranty.
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