Will cell phone insurance save you money?

Question: Frequently Asked Questions: Will Cell Phone Insurance Save You Money?

Answer: Is cell phone insurance something you need or would you lose money on it? One in three customers will lose or damage their phone in the first year, according to Sprint. In total, this equates to approximately 60 million cell phones that are lost or damaged each year in the US alone, according to Asurion. Asurion is the third-party insurance agency for most major wireless carriers (including AT&T, Sprint, T-Mobile and Verizon Wireless).

Factors to consider

While it depends on your unique situation, the short answer is that you could often be spending more money on it than you’re saving. Cell phone insurance can be helpful if your phone is stolen, lost, or damaged. As with any other insurance policy, the name of the cell phone insurance game is whether you’ll spend more money insuring it than you’d save by filing a claim and getting a replacement unit.

The information included here should apply no matter who made your Android phone: Samsung, Google, Huawei, Xiaomi, etc.

The final answer will depend on how quickly you need a new phone. If you need a replacement device in just 3 months, for example, cell phone insurance has likely saved you money. As a general rule, cell phone insurance is unlikely to save you money if you have a low-cost, low-budget cell phone. Cell phone insurance can be more valuable, however, with more expensive phones (and especially smartphones).

As an example, Sprint offers a device replacement program for $4 per month with a non-refundable deductible of $50 to $100 (depending on device) per approved claim. AT&T charges $4.99 per month with a non-refundable deductible of $50 to $125 per approved claim. . AT&T allows two claims per year with a maximum replacement value of $1,500. T-Mobile charges $5.99 per month with various non-refundable deductibles. Verizon Wireless charges $5.99 per month with a $39 deductible for basic phones or $7.99 per month with an $89 deductible for advanced devices.

hypothetical examples

Let’s say you buy a cell phone for $100 and insurance for $5 a month with a $50 deductible. You’ll only save money on a replacement if your claim is filed before the ninth month. If you buy a phone for $200 and insurance for $5 a month with a $75 deductible, you’ll save cash if you apply sooner than two years. By then, you will have paid $195 in total ($120 for insurance and $75 for deductible).

Alternatives to traditional cell phone insurance

  1. If you are under contract with your insurance company, it may be wise to avoid insurance and wait until you have an eligible upgrade. After 12 or 24 months, for example, many carriers offer a $100 to $200 discount when you reset your contract date and purchase a new phone.
    1. If you are not under contract, this consideration may not be a factor for you. Prepaid mobile phone operators do not usually offer discounts for the purchase of a new phone. Without signing a contract, cell phones are usually more expensive.
    2. Because signing a contract often subsidizes the price of your phone, another general rule of thumb about insurance is that it’s more likely to save you money when you’re not under contract.
  2. Another option is to do your own cell phone insurance program (call it your self-insurance program) instead of paying another company for it.
    1. Just put $5 aside each month, for example, in a high-interest savings account or money market account. If your phone breaks, you’ve already set aside money for a replacement without having to worry about filing a claim or paying a deductible.
  1. Maybe it’s time to take a look at your cell phone plan. Don’t know where to start? We have information that can help you save money on your current plan.