3 Surprising Facts about Cell Phone Insurance

article by Arya A. author
A new cell phone costs a lot of money, and it’s only natural for you to want to protect your investment. Many people are happy to send a few dollars a month to wireless carriers, or even to a third party company, in exchange for the peace of mind that comes with cell phone insurance. However, while insurance may provide the sense of being protected, the reality can be much more complicated than other aspects of cell phone deals.

And that’s unfortunate, because in comparison to searching for the cheapest cell phone plans, consumers are not nearly as diligent about doing research on the possible options. To help you make a more informed decision, we’ve laid out three surprising facts about cell phone insurance that you should consider before taking out a policy:

Fact #1: Insurance Plans Won’t Always Replace Your Phone

Many consumers assume that insurance is a fail-safe against any kind of damage or loss, but the reality is that this is not the case. Just like it’s important to read the fine print of cell phone plans before signing up for one, it’s equally critical to read through any insurance policy you are considering in order to completely understand what is or is not covered. The most common misconception is about theft, which many people assume is covered. In fact, may policies only pay out on claims for damage or defects, leaving the policyholder without any recourse should their phone be stolen.

Fact #2: You Usually Have to Pay a Deductible

Too often, consumers incorrectly believe that their monthly premium is all they need to pay to get full coverage. Phone insurance works in the same way many other types of insurance do, requiring deductibles to be paid by you before any claims will be paid out by the insurer. Depending on your carrier and the type of phone you have insured, deductibles can range anywhere from $50 all the way to $200.

Fact #3: A Replacement Phone May be Lower Quality

The best cell phone plans often provide consumers with state-of-the-art devices. For consumers taking insurance out on these phones, the assumption is that they will be entitled to the same model if they need a replacement. However, insurance companies are often only required to provide a “comparable” device to meet their obligation under the terms of the policy. In some cases, this could mean you end up with something that is an entirely different model or brand than what you had.

Should You Buy Phone Insurance? Maybe.

There is value in taking out an insurance policy on your phone, but with a small caveat – buyer beware. Consumers would be wise to devote the same amount of time researching policies as they would hunting for the best cell phone plan deals. If you decide to remain ignorant and assume the policy you take out will cover everything you expect it to, you are likely in for a letdown just at the moment when you need help the most.