Considerations on Insuring a Smart Phone

Info Symbol on Mobile by Stuart Miles

With a recent upgrade to a latest model smart phone, my cell phone carrier sent me an offer to purchase insurance to cover my phone in the event it is lost, stolen, or water damaged. For a mere $6.95 per phone per month, why not? Especially when they claim to have your phone replaced as early as the following day.

The fine print, however, offers details that make this seem much less appealing:

  1. Depending on the device, the deductible could be $50, $125 or $199. Considering my phone cost $199, then the economic sense of paying the extra monthly charge for this is questionable, at best.
  2. The insurance covers no more than two claims per year.
  3. The replacement phone may be a refurbished one and not necessarily the same as the shiny, brand new device you cared enough about in the first place to buy the insurance.

The advice of Consumer Reports (April 2009) remains sound. Avoid purchasing the insurance offered by cell phone carriers—it is simply not worth the extra monthly charge—especially for families with multiple phones on a plan. If possible, save your old cell phone (if replaced) to use as a backup should the need arise.

Another option for coverage would be to see what is offered outside of the phone company and two come to mind:

  1. There is coverage that may be purchased through the phone manufacturers, however, that may not cover lost, stolen or damaged phones. My particular manufacturer offers protection for factory defects and hard drive issues, but clearly states the above situations would not be covered.
  2. Wouldn’t my Homeowner’s or Renter’s policy cover the loss under my Coverage C Personal Property? If only the cell phone was lost, stolen and damaged then the deductible on the policy would counteract any possible claim. However, if the cell phone was one of many home contents destroyed in a covered loss, for example, in a fire or stolen in a burglary, then yes, the phone would be covered among the other lost items minus the deductible.
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