Smartphone carriers offer insurance for your devices, but it may not be a good fit for all users. Find out whether you're a match for a protection plan.
The other day my younger son got out of my wife's van holding her iPad and accidentally dropped it, shattering the screen. As you can imagine, the tone of our environment abruptly changed from "The Brady Bunch" to "Reservoir Dogs" in about three seconds (I usually play the role of Mr. White).
Fortunately, my wife had AppleCare for her iPad and got fixed it for $49, so it was back to normal that same day without any further unpleasantness. It got me thinking about insurance, however; how it can apply to mobile devices and whether it's worth it in all scenarios.
The AppleCare example notwithstanding (we have kids, so obviously we need it), I've always been a bit skeptical of some insurance and protection plans. The protection plans on the bargain basement Blu-ray players at Best Buy, for instance, seem wasteful and designed to take advantage of customers losing or forgetting about the paperwork (this also applies to rebates). Some insurance, such as for cars, houses and lives, is useful and necessary, of course, but in the end I think other forms of insurance are the reverse of gambling: they're betting you won't lose, but in Vegas the house bets you won't win.
Whether your company provides smartphones to employees, they pay for their own via a bring your own device (BYOD) arrangement, or you just want to find out if it makes sense for your device, knowing whether to opt for insurance is an important call that can make the difference between wasted funds or a meaningful investment.
I realize that insurance programs will vary by carrier, device, plan, and the people involved, but here is a good example of what smartphone insurance costs with a Verizon Wireless account. Verizon offers several different plans:
Extended Warranty - Provides protection against device defects after the manufacturer's warranty (one year with Verizon Wireless) expires. Subscribers will receive a new or "certified like-new" replacement of the same or comparable model if their phone is lost or damaged.
Wireless Phone Protection - Provides replacement devices in the event of loss, theft or damage.
Total Equipment Coverage - This represents Wireless Phone Protection combined with the Extended Warranty program. In other words, if the smartphone or any covered accessories are lost, stolen or damaged, or the device experiences a mechanical/electrical defect after the manufacturer's warranty expires, they will replace it.
Total Mobile Protection - This represents Total Equipment Coverage plus technical support.
Here's a matrix of some examples of smartphone costs, plans, and deductibles. Note the "discount price" for each assumes a 2-year contract, and all devices have 16 Gb of storage.
Phone Price Price Plan Cost Deductible
iPhone 5s $649.99 $199 Extended Warranty $3/mo $169
iPhone 5s $649.99 $99 Wireless Phone Protection $8.18/mo $169
iPhone 5s $649.99 $199 Total Equipment Coverage $9.99/mo $169
iPhone 5s $649.99 $199 Total Mobile Protection $10/mo $169
Samsung Galaxy S5 $599 $99 Extended Warranty $3/mo $99
Samsung Galaxy S5 $599 $99 Wireless Phone Protection $5.18/mo $99
Samsung Galaxy S5 $599 $99 Total Equipment Coverage $8.00/mo $99
Samsung Galaxy S5 $599 $99 Total Mobile Protection $10/mo $99
The deductible cost is what you would have to pay to replace each device (you are allowed two claims per year). Now, it may seem absurd to pay a deductible cost that's the same as (or close to) what you paid for the device in the first place, but keep in mind without one of these plans in place you'd have to pay full price to replace your smartphone. There's a big difference between $99 and $599 - at least if you stick with your carrier.
Obviously if you paid a monthly protection fee sooner or later you'd foot the bill for the cost of a new smartphone - what you paid for it after the discount, at least. It's not likely that even the total mobile protection plan would wind up costing more than a brand new iPhone 5s; that would take 65 months or about five and a half years, and few people retain their phones this long.
It's important to keep in mind that sometimes smartphone damage might be cheaper to fix elsewhere rather than relying on a protection plan. For instance, a broken screen might cost you $50 at a repair shop, but you would likely pay the full deductible cost to replace the phone under an eligible plan. If you didn't have a protection plan and the smartphone was damaged it might also be cheaper to break the contract, pay an early termination fee and get a new phone elsewhere at a discounted price. Finally, paying for technical support in the Total Mobile Protection plan may be unnecessary if you have few issues (or are handy with Google and asking questions in free support forums). Therefore, it's important to review the options associated with the plan and carrier to make the best decision.
Making the call
Ask yourselves these questions if you're considering insurance for a smartphone. If it's for a user and not yourself you'll need to change the focus of the questions to this individual.
- Are you clumsy or accident-prone?
- Do you have kids who like to share your devices?
- Do you travel often or go out frequently?
- Do you use your smartphone while exercising or in extreme environments (I swear I saw a man going down a waterslide with his iPhone recently, apparently intent on recording the experience)?
- Are you forgetful or absent minded?
- Are you meticulous with documentation?
- Does your smartphone lack any protective coating or case?
- Would paying full price for a replacement phone represent a financial hardship?
If you answered "yes" to three or more of the above, I'd recommend considering insurance. You can play with the numbers to see what you might expect to pay for your phone (or one you support) at http://phoneclaim.com/verizon.
Of course, some of these can be remedied. I use a Zerolemon Rugged Case to protect my Samsung Galaxy S3 and it could probably stop a bullet (a low caliber one, anyhow). You can stop taking your smartphone down the waterslide. You can keep it in your pocket instead of on your belt (just getting into a car can lead to a broken holster and possible a damaged smartphone if the holster catches on the car door and breaks).
Ultimately, whether insurance for a smartphone you own or support is a good idea can only be answered by the user(s) involved, but hopefully this provides you with a good baseline for knowing what to expect and what value the concept may bring.