The Pros and Cons of Cell Phone Insurance

Clumsy people know bad things can happen to a cell phone. It can slide off a kitchen counter and shatter against your tile flooring. You can fumble it when you try to take it out of your back pocket, meeting the same fate on the sidewalk. More embarrassingly, you can drop it in the toilet and fry its circuits.

Replacing a cracked or waterlogged phone isn’t cheap — most of the big-named brands charge $1,000 or more for their latest flagships. If you can’t pay that price out of pocket, you might consider taking out a phone insurance plan.

But does this coverage work as advertised? Let’s compare the pros and cons to help you determine if this insurance is worth it.

Pro: It Can Cover a Full Replacement

Replacing your phone right after you poured all your savings into getting the latest flagship can be devastating. Unfortunately, your latest contract probably maxes out the available financing, so you can’t count on your cell phone provider to offset any of the costs.

If you have to pay for a new phone out of pocket, there’s a good chance you can’t afford another iPhone. You’re more likely going to get stuck with the cheapest model available — you could even resort to a flip phone.

With insurance, you may not have to worry about the big bill. Provided your policy covers the cause of your damage, your insurer will buy you a new phone of equal quality.  

Con: You May Have to Pay a Large Deductible

Your cell phone insurance company may expect you to pay a deductible before it shells out the remainder of your replacement costs. Your deductible represents the portion of the bill you must pay out of pocket.

Out-of-pocket expenses can be challenging to handle on your own — but not impossible. Online loans are there to help. The line of credit belongs to the large umbrella of online options available in emergencies. Take some time to compare these loans to ensure you know what you’re getting into.

With the right line of credit, you can take on this unexpected deductible and pay it off in installments. Just watch for interest and finance charges — the longer you take to pay off your line of credit, the more time you have to accrue these fees.

Pro: It Covers Stolen and Lost Phones

Damage isn’t the only thing insurance covers. Some policies also cover lost or stolen devices.

Realizing you don’t have your phone any more is stressful. It can also be incredibly frustrating — whether you leave it in the back of a taxi, or someone nabs it from your bag while you’re distracted.

Knowing your insurance will cover the cost of a new phone can take some of the sting out of your embarrassment or annoyance.

Con: It May Not Cover All Damages

Sadly, like any insurance, it’s only as good as the policy. Some insurance companies provide a tiered coverage plan — the less you pay, the fewer protections you get.

Before you commit, read the fine print carefully to understand what your policy will and won’t cover. If you don’t, your insurer might surprise you by denying your claim. Not only will you have to pay out of pocket for a new phone, but you will also have to sit with the fact you paid into an insurance policy that doesn’t work.

So, is Insurance Worth It?

This article can’t answer that for you. Instead, you’ll have to weigh these pros and cons and see how monthly premiums fit into your budget.