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Cell Phone Insurance… Bad Deal or Good Investment?

So, you’ve got your bright, shiny new IP5.  You set it down on your workbench, and then notice that the bench has termites.  So you do what anyone would do… you take your sledgehammer and start whacking away at the termites with it.  But one shot goes astray, and the next thing that you know…

So now what do you do?  You just got the phone as an upgrade, so you won’t be eligible for another one for at least a year and a half.  You could call your provider and ask for the special upgrade price early, but you saw a web news tidbit recently about the providers being less willing to do that than in past days.  You could always cough up $650 for a new phone, but that would really take a chunk out of the budget.

Well, one option, if you’ve added it to your mobile phone account is Cell Phone Insurance (also called Mobile Handset or just Handset Insurance or Handset Protection Plan or something similar).  The insurance will cost you between $5 and $6.99 per month on your bill for a premium, depending on your carrier, and, if you have to file a claim, you can expect to pay a deductible between $25 and $199, depending on carrier and type of device that you have.  (Note:  The lower ends of those are Virgin Mobile, which can offer lower premiums and deductibles because they don’t offer iPhones, Galaxies or any of the other smartphones at the higher end of the cost spectrum.  For the other providers, it’s about $6 or $7  per month and deductibles between $50 and $199 depending on device.)

Let’s say that you recently upgraded to an iPhone 4S for $99, you were flirting with someone at a bar and while you were looking away from your phone, someone stole it.  50 to 60 per cent of thefts in the US today involve iPhones.  So you go to process and insurance claim and are told that the deductible cost for that phone is $199, and don’t feel that you should have to pay that since the phone only cost $99.  Bear in mind, though, that the price that you got on the phone was an upgrade price, and if you don’t have another upgrade available on your account or handset insurance that a new 4S will cost you more than double that price.

A personal experience similar to that… I’ve carried handset insurance on my phones since I got my first cell phone.  Back then, there were no deductibles and I was not aware that they were added.  So when I dropped my Samsung Captivate in the dog’s water dish a year ago Christmas, I was pretty angry that they were going to charge me a $125 deductible on my phone.  Now that I’ve had time to come to grips with it, however, I view it as being like car insurance… something that I pay more money for over time than I will probably ever collect out of it, but something that will save me money if I ever need it.

You do need to enroll within 30 days of activating your device.

Another option, if you have an iPhone, is Apple Care, which is an extended warranty that you purchase through Apple.  It costs $99 and extends your warranty on your device from one year to three, but does not cover accidental damage, loss or theft like mobile handset insurance does.

~ Randal