What You Should Know Before Getting Cell Phone Insurance

When buying a new cell phone, you’ll be asked if you’re interested in purchasing an insurance policy that protects the phone from certain damages, like a cracked screen or malfunctions not covered under the warranty. Cell phone insurance is a godsend when you have slippery fingers, but there are a few things to know before opting for coverage.

1. Insurance doesn’t cover everything.

When you think of cell phone insurance, you might imagine the policy covering any and every type of damage. Since insurance coverage varies, it’s important to read the fine print of the policy and understand exactly what you’re getting. There are different levels of coverage and, unfortunately, if you choose the cheapest coverage available, the policy may only cover some damages and exclude others. Also, the policy might not cover the cost to replace a lost or stolen phone, which can come as a surprise if you try and file a claim.

2. You have to pay a deductible.

Just like any other type of insurance, cell phone insurance policies include a deductible. This is the amount you pay out-of-pocket before coverage kicks in. Deductible amounts vary depending on your monthly premium; and sometimes, the deductible is just as expensive as getting a new cell phone.

For example, let’s say you get a cell phone through Sprint and pay $299 under a two-year contract (which is less than the full price, since the carrier subsidizes the cost). And let’s say you purchase an insurance plan in the event of an accident. The deductible to replace the phone could be as high as $150.

Of course, this is much cheaper than having to purchase a replacement phone at full price. Still, the amount you’re required to pay might be more than expected, hence the importance of reading the terms of an insurance agreement and understanding what you’re getting for the money.

3. Multiple carriers may use the same insurance provider.

If you purchased a cell phone from a phone carrier in the past and you didn’t like their insurance provider, you might think of switching carriers to get better insurance. The problem, however, is that most cell phone carriers use the same insurance company.

Cell phone carriers sell cell phones and provide cell coverage—they’re not in the insurance business. Therefore, they use third-party insurance companies. If you leave one carrier and go with another, you could end up with the same insurance provider.

4. You can purchase your own insurance.

Keep in mind, you don’t have to purchase insurance through your cell phone carrier. There’s also an option of buying insurance on your own, and several third-party companies will provide cell phone coverage as long as you purchase the insurance within a certain timeframe. The only problem with purchasing your own cell phone insurance is that some independent insurance companies don’t allow monthly payments, so you’re required to make a lump size upfront payment which could be hundreds of dollars.

The Takeaway: Accidents happen and getting cell phone insurance can provide peace of mind. While the cost of insurance is relatively cheap—sometimes as low as $10 a month—the cost adds up over time. Plus, your policy might not cover every type of damage.

Only you can decide whether cell phone insurance is worth the cost. Regardless of whether you choose to buy or skip coverage, take steps to protect your phone. This includes getting a heavy-duty phone case and purchasing a high-quality screen protector. Also, don’t carry too much stuff in your hands. This increases the risk of dropping the phone and cracking the screen.