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There you are in the checkout line at the wireless store with your shiny new cell phone.
You are in the beginning stages of what I call “New Phone Love.” You silently promise yourself and your new phone that you will never drop it, scratch it, or let any harm befall it. You simultaneously block out the memories of dropping your previous phone 3000 times, accidentally spilling Kool-Aid on it, and pulling it out of your dog’s mouth a time or two.
As you finally step up to the register and pay a mortgage payment for your new phone, you tell yourself it will be different this time. You will take complete care of this new phone. I am convinced that the wireless store associate at the register can sense your sudden, overwhelming urge to protect your new phone and is trained to capitalize on this opportunity.
What opportunity? The opportunity to sell you mobile device insurance for a cute little fee each month. So at this point, you either sign up immediately thinking that there is nothing you wouldn’t do to protect your new device or you pause and ask yourself:
Is Mobile Device Insurance Worth the Cost?
First, let’s just look at what the cost of mobile device insurance is over the span of 2 years which is usually the contract period for most devices. For this post, the insurance rates that I am using are from plans offered by Verizon Wireless. Other wireless companies may vary in what they offer for mobile device insurance.
Plans & Cost
The three plans that I am comparing are Total Mobile Protection, Total Equipment Coverage, and Asurion Wireless Protection. The monthly cost for each of these plans vary by a few dollars, so I used the average cost for each plan in these graphs.
Total Mobile Protection: Cost/month $9-$11 Avg. $10
Total Equipment Coverage: Cost/month $7-$9 Avg. $8
Asurion Wireless Protection: Cost/month $5-$7.15 Avg. $6
Here is the cost for one device, over a 2 year span, under all three mobile device insurance plans:
With these mobile device insurance plans, you would be paying between approximately $144 to $240 to insure your phone over the course of your 2 year contract.
But what if you have multiple devices?
Do you get mobile device insurance on all of them?
Here is the monthly cost for 2-6 devices under all three insurance plans:
As you can see, the monthly cost of mobile device insurance really adds up once you start adding multiple devices. You could be paying up to $60 (or more) per month for insurance if you have 6 devices!
So how much does that add up to over the course of your 2 year contract?
Assuming you chose the middle of the pack Total Equipment Coverage plan that averages around $8 a month (but could be between $7-$9), here is what you would pay over the 2 year contract period for multiple devices:
If you have between 2-6 devices, you could be paying between $384-$1,152 (or more) for insurance over the 2 year contract span.
It’s a lot of money to pay, but it may end up saving you cash in the long run.
But what if you damage your phone and insurance won’t cover it?
What they don’t tell you…
When you have a look at the Terms and Conditions of these mobile device insurance plans, there are several types of damage that the plans will not cover. One of the major ones is water damage. None of these insurance plans will cover water damage to your phone from spills or immersion in liquids.
Water damage is one of the most common ways that people damage their phones. Dropping it in the sink, in the toilet, or spilling your drink will kill your phone fast. Too bad that insurance plan doesn’t cover replacing that phone.
There are several other types of damage that is not covered under these mobile device insurance plans. You can read the Terms and Conditions of these plans here to find out what else is not covered.
What will it cost me to replace my phone?
Let’s say that the damage to your phone is covered under your insurance plan.
You buy insurance so that you are able to replace your device without spending money on a new phone right? But they don’t just give you a new phone for free. You get charged a deductible when you choose to replace your damaged device. The price of the deductible depends on the type of device you have. You can find out the deductible cost as well as the exact price to insure your phone under any of the three plans here.
The chart below shows the difference in deductibles and yearly insurance rates for the Apple iPhone 6S 16GB, Samsung Galaxy S7 Edge 32GB, and the LG G5.
For example: Say I have a Samsung Galaxy S7 Edge and I purchased the Total Mobile Protection plan. If I damage my phone after having it a year and a half, I have already paid $198 to insurance and will now have to pay another $199 to the deductible. So I am technically paying almost $400 to get my phone replaced.
Considering the new phone retails between $600-$700, this would technically save you money.
So here is the thing…
How likely are you to completely damage your phone? Have you damaged your phones frequently in the past? If you do damage your phone, will the damage be covered by insurance? (Meaning that if you are prone to dropping it in water, insurance isn’t going to help you!)
Really just how accident prone are you?
If you are a person who has had a string of destroyed phones in your past, then yes, getting insurance is probably your best bet. But if you take fairly decent care of your phone and have just minor wear and tear, then I would suggest saving your money and forgoing the insurance.
Remember that with these mobile device insurance plans, you would be paying between approximately $144 to $240 to insure your phone over the course of your 2 year contract. Don’t pay that money to an insurance company if you don’t have to!
Here is what to do instead…
What is my alternative?
Instead of signing up for a mobile device insurance plan for each device you buy, put the money you usually would pay each month into one of your own savings accounts.
That way, if any of those devices does happen to get damaged, then you will have money set aside for that replacement. But if you don’t end up damaging your phone, all that money that you set aside is still yours! No throwing money away on useless insurance. You’re essentially creating your own insurance policy where you control your money.
Also, don’t forget the importance of a great phone case! A solid phone case is the only insurance we need on our phones in our household. OtterBox is our favorite. You can buy them quickly and easily on Amazon, and they will be at your doorstep in a few days.
Thanks for reading! Hope you enjoyed this post.
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