Is Cell Phone Insurance Worthwhile?

In my opinion, insurance add-ons provided by cell phone carriers are not worth the cost. Let us begin with a brief overview of the warranty process. Most of the time, cell phone carriers will outsource their warranty fulfillment departments/policies to third-party companies, which in itself, adds a level of complication to the matter. From my experience, the replacement phones that you will receive are always refurbished and never new. Furthermore, the phones are not very reliable, and in a surprising amount of some cases, not work at all. In fact, do not be shocked to hear that people, who utilized these systems, wind up exchanging the phone multiple times within a calendar year due to the simple fact that the replacement never worked 100%.

Now let us move onto the topic of the actual insurance policy. What the sales representatives do not tell you at the time of purchase is that the policy does not cover physical damage or abuse, in most cases. Furthermore, what they do not tell you is that the insurance company has the ability to define what is considered abuse or not. What this means to you is that you is an actual claim will need to be filed and verified before you are eligible to receive a fulfillment, or in most cases, a denial. What is abuse/physical damage, you ask? It can range from something obvious such as dropping your phone and cracking the screen to minor things such as damaging the keyboard or accessory jacks (power, headset, etc) from misuse. What is misuse, you ask? In the example of the keyboard/pad, keys pressed too hard may result in them losing sensitivity, or being permanently stuck down. As for the accessory jacks, they work on the same principal. That is, forcing a cable in too many times, or leaving the cord plugged and damaging the socket from sudden force or movement. To further clarify, let's say that you typically leave the phone charging, and the power cord is the type that locks into the socket (a button is required to be depressed before you can unplug/remove it from the phone). Now, let's say that something accidentally hits that cord in a direction that it was not supposed to go in, resulting in a broken port and/or cable. That would be defined as abuse/misuse.

Continuing on the topic of accessories, as they are a common subject of warranties and insurance policies, are rarely covered due to being defined as a consumable product (something that is not designed to last, and can be replaced). Therefore, nothing that included in that spectrum, such as a charging cable or even a battery, will be covered. Why batteries, you may ask? Batteries are often the first accessory to be replaced due to improper charging habits established by the user. In fact, they can cost as much as a new phone will be with a contract upgrade. To further perpetuate the reasoning behind lack of coverage, a large amount of consumers will require a replacement anywhere to the first months up to the first year of service with a brand new phone. As stated before, improper charging is the typical culprit, meaning that the user either leaves their phone charging for extended period of time (overcharging), or frequent charging (charging for short periods of time without previously allowing the battery to drain down completely, or allowing it to charge to capacity while plugged in).

Bottom line; don't waste the average of $60 a year (typical cost of $5 per month over the course of a period of 12 months) in insurance costs and save it towards your next contract upgrade. If you are in desperate need of a replacement and cannot upgrade, try websites like eBay. You'll have better odds in receiving a working phone the first time instead of going through a warranty process. Finally, invest in protection for your phone. A well made case and screen protector for your phone can drastically reduce the need to get a replacement due to common issues with damage and use.

Source: An article that I've previously written and published.