Is Phone Insurance Worth It?

When it comes with a comprehensive set of protections, it could be.

Cell phones play an ever-increasing role in our everyday lives. We rely on our phones not only to stay in touch, but for financial transactions, business deals, and staying informed about everything from world events to local weather. As we depend on cell phones more and more, we need better, more expensive equipment, which increases our financial risk.

The market offers several ways to safeguard your phone, some offering better protection than others. Cell phone insurance plans offer comprehensive protection, typically at an affordable monthly rate. Nonetheless, phone insurance is not for everyone.

Key Takeaways

  • Some phone insurance plans cover damage, lost phones, and theft.
  • Both phone manufacturers and service providers offer phone insurance.
  • Some credit card companies provide supplemental phone protection.
  • Homeowners and renters insurance policies provide limited phone protection.

The Cost of Cell Phone Insurance

The cost of cell phone insurance varies by plan. Some plans include a robust set of protections that cover losses such as accidental damages caused by drops or liquid, cracked screens, power surges, and theft. Cell phone insurance typically does not cover cosmetic flaws, modifications, and normal wear and tear.

When it comes to protecting your cell phone, you have several options.

Manufacturer Insurance Plans

Some cell phone manufacturers offer insurance plans that provide protections that go beyond the warranty. For instance, Apple offers two cell phone insurance plans, AppleCare+ and AppleCare+ with Theft and Loss for its iPhone products.

Oftentimes, you can purchase a manufacturer’s cell phone insurance plan when you buy a phone, or within a specified period after the purchase. These types of plans often limit the number of claims per year and may include service fees or a deductible. For example, the Apple plans include up to two claims per year and service fees or deductibles of $29 for a damaged screen, $99 for other damages, and $149 for loss or theft.

Pricing for manufacturers’ cell phone insurance can depend on your phone’s model. For instance, AppleCare+ with Theft and Loss coverage costs $3.99 per month, or $79 per year, for an iPhone SE, while coverage for an iPhone 13 Pro runs $9.99 per month, or $199 per year.

Service Provider Insurance Plans

Major service providers often offer cell phone insurance plans for their customers. For instance, Verizon offers a plan that covers damage, loss, and theft, with a fixed rate of $29 for screen repairs. Monthly rates and deductibles depend on your phone’s manufacturer and model. For example, coverage for a Samsung A610 costs $14 per month with a $19 deductible, while protection for an iPhone 12 runs $17 per month, with a $229 deductible.

AT&T also offers a plan with a rate of $14-$17 per month depending on device model. It will  cover up to three loss, theft, or physical damage claims every 12 months, and features $29 screen repair and unlimited battery replacement.

Educational Cell Phone Insurance Plans

Some colleges and universities offer cell phone insurance plans for their students, professors, and staff. For example, cell phones purchased through Columbia University’s Information Technology department are eligible for device coverage starting at $11 per month. The Columbia plan requires paying a $99 deductible for each incident.

Homeowners or Renters Insurance Coverage

Most standard homeowners and renters insurance policies offer limited cell phone protections. If your phone is destroyed in a covered loss, such as a fire, the personal property coverage of your policy will cover it. Likewise, personal property coverage also protects your phone from theft or vandalism, which may occur in your home or away from home.

However, most homeowners and renters insurance policies do not cover accidental damage to your phone. So, if you drop your phone and crack its screen, you can’t rely on your home insurance coverage.

Some major insurance companies offer standalone coverage for cell phones. For instance, through a partnership with SquareTrade, Allstate offers a phone protection plan for $12.99 per month. This plan covers accidental losses such as a cracked screen or liquid damage, along with charging port and battery failures.

Note: Deductibles apply to the personal property coverage of your home or renters insurance policy. If your policy has a $1,000 deductible, it will not provide protection for a $500 cell phone, but the cost of repair or replacement as part of a covered claim will count toward your deductible.

Credit Card Cell Phone Protection

Some credit card benefits include cell phone protection. For example, some Wells Fargo credit cards offer up to $600 in cell phone coverage, with a $25 deductible. Wells Fargo’s coverage protects against damaged or stolen cell phones, but does not cover lost phones.

The Visa Signature credit card also covers damaged or stolen cell phones, with a $50 deductible, and American Express provides up to $800 in phone coverage, with a $50 deductible.

Many credit card protections offer supplemental coverage. So, if your phone is covered by your homeowners insurance, you must exhaust that coverage before filing a claim with your credit card company.

Note: Oftentimes, credit card companies only offer cell phone protection if you use your credit card to pay your monthly service provider bill.

Considering the Risk/Reward of Phone Insurance

When considering buying phone insurance, think about the cost of coverage and the protection it will provide. Can you afford the monthly or yearly insurance rate? Can you afford to buy a new phone if yours is damaged, lost, or stolen?

Phone insurance can save the day when you need it. Having the coverage ensures that you can purchase another phone if a thief makes off with yours or can afford repairs if it sustains damage.

When Is Phone Insurance Worth It? 

When considering whether to buy phone insurance, think about how important a cell phone is in your daily life. More importantly, consider how not having your phone would impact your life.

Staying Connected

Folks who rely heavily on their cell phones likely need phone insurance. Perhaps you depend on your phone to stay connected with your family and friends or rely on it for internet access. People who rely on their phones for work likely need phone protection to ensure quick replacement.

Damage or Loss Potential

Parents who allow young children to use their expensive phones for calls or games run the risk of serious damages. Commuters who use public transportation face the threat of snatch-and-grab cell phone theft. Active people risk damaging their phones while exercising at the gym or hiking. And some folk simply tend to drop their phones.

Cost Considerations

The average price of a smartphone is just over $350, with the iPhone 13 Pro selling for as much as $1099, so consider whether you can afford a replacement.

Apple. “iPhone 13 Pro.” Phone insurance is particularly important if you purchase a high-end phone through a monthly installment plan, otherwise you could be on the hook for months or years of payments if your phone is damaged, lost, or stolen.

When Isn’t Phone Insurance Worth It?

Phone insurance isn’t for everyone. While some people live with their phones in their hands, others only use them to make calls and occasionally surf the web. Others work from home and still have a landline connection.

If you bought your phone through an installment plan, and have paid it off, you probably don’t need phone insurance. However, before dropping coverage, determine whether you can afford to buy a new phone if yours is damaged, lost, or stolen.

Phone insurance is not for people who buy inexpensive phones. It doesn’t make good financial sense to pay $15 a month or more for a phone that costs $150.

The Bottom Line

Phone insurance provides valuable protection for people who own expensive phones and those who heavily rely on their phone every day. The market offers several ways to protect your phone, with manufacturers’ and service providers plans. Home and renters insurance policies, as well as some credit card companies, also provide phone protection options.

Determining whether you need phone insurance depends on the importance of having a cell phone and your financial ability to replace it.

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