Mobile Device Insurance – Is it a Rip Off?

| February 12, 2014 | 0 Comments

Cell-Phone-InsuranceFirst you shell out a few hundred dollars for your mobile device and then you spend an inordinate amount of time becoming attached to it.  You take it everywhere and you’re lost without it.  Key words here, “you’re lost without it.”  Any time you have an object that you’d be lost without, it’s time to make contingency plans.

There are a few ways you can protect your device, and today we’ll discuss whether or not insurance is the right option for you.

Taking Preparations to Protect Your Device

The sales person strongly advises customers to pay the small monthly fee to insure the device.  What’s an extra $8 or $10 a month?  After all, to any prudent person, it makes sense to buy insurance to protect the new investment.  The question is…is the investment really protected and is the protection cost effective?

There are three things to consider when thinking about a mobile device insurance plan.

  1. What is covered
  2. The monthly premium
  3. The deductible per claim
  4. Financial reimbursement or device replacement

Let’s take a look at three popular cell phone companies (Verizon, At&T and Sprint) and the insurance they offer for their devices.

 Verizon:

  • Total Equipment Plan Coverage :  If the device or covered accessories are lost, stolen or damaged; or your device experiences a mechanical or electrical defect after the manufacturer’s warranty expires, you’re protected.
  • Monthly Premium per Phone: $$8 phones (excluding Apple iPhones), $9.99 Tablets, iPhones and other devices
  • Deductibles: From $45 to $199
  • Device Replacement: Replacement devices may be re-manufactured equipment. If the same model is not available, a comparable model will be provided.
  • Losses are limited to 2 claims in any 12-month period with a maximum dollar amount of $1,500.

 AT&T

  • Covered Losses:  Covers all risk of direct physical Loss to Covered Property regardless of other insurance you may have except that they do not cover those causes of Loss listed in Exclusions (Section II)
  • Monthly Premium per Phone: $6.99
  • Deductibles: $50-$199
  • Device Replacement: Claims may be fulfilled with new, AT&T Certified Like-New re-manufactured or other models of like- kind and quality.
  • Losses are limited to 2 claims in any 12-month period with a maximum dollar amount of $1,500.Shattered Cell Phone Screen

 Sprint

  • Total Equipment Loss Program: Loss, theft, physical or liquid damage; unlimited claims for mechani­cal or electrical failure due to de­fect or normal wear and tear; routine maintenance.
  • Monthly Fee:  $8-$11 Phones; $13- Tablets
  • Deductibles: $50-$200
  • Device Replacement: Replacement equipment may be new or a Sprint certified remanufactured*** device and/or a comparable model  (*** Remanufactured equipment provided by CNA as replacement equipment meets Sprint’s strict quality standards and is Sprint certified).
  • Three claims within any given year subject to a maximum of $1,500.

In addition to the above-mentioned carriers, there are a host of smaller and not so small companies offering cell phone protection.  Companies such as Best Buy Geek Squad Protection , ProtectCell Complete , Protect Your Bubble , and several more. Too many for me to list here.

Problems with Replacing Devices

The insurance company has the option of replacing your brand new device with a refurbished or comparable model.  This may not be as bad as it sounds, but what if the comparable model you’re issued is incompatible with all of the cell phone periphery you’ve purchased.  Unless you purchased a cell phone plan that covers your accessories, you’re stuck with useless accessories.

Another thing to consider is the market value of refurbished phones.  When you add up the amount of money paid in monthly insurance premiums and tack on the deductible, you’ve paid enough money to get … a refurbished phone.    You have to do the math on your own device to see if buying insurance is worth it.

Get Paid the Value of Your Device

There is another alternative.  Instead of taking the risk of receiving a refurbished cell phone or tablet that’s not of your liking, why not purchase a policy that will pay you the value of your device?  The Worth Ave. Group does just that.  It’s an insurance company that does not repair or replace your device.  It reimburses you for the value of your device.

Earlier we discussed four considerations when purchasing an insurance policy for your device.  Here’s how The Worth Ave. Group compares:

  • Losses Covered:  Theft, accidental damage, cracked screen, liquid submersion, fire, flood, earthquake (natural disaster), tornado and hurricane.  Does not cover losing the device.
  • Annual Premium:  Premium determined by value of device and deductible selected
  • Deductibles:  You choose either $0, $25, $50 or $100
  • Reimbursement:  Face value of the insurance policy

The Worth Ave. Group’s annual premium is based on the value of the device and deductible selected. For example, the cost to cover a $600 tablet for one year with a $50 deductible is $41 for an adult and $61 for a child (K-12).

Homeowners/Renter’s Insurance

Don’t forget your device is afforded a level of coverage under your homeowners/renter’s insurance policy.  While the unendorsed homeowner’s policy won’t cover mechanical breakdown, you do have coverage if it’s stolen or damaged in conjunction with other items of your household.

Insurance companies offer special endorsements to cover home computers and mobile devices.  Liberty Mutual, for example, offers Home Computer and Smartphone Coverage to renters.  The endorsement is subject to a $100 deductible, but it expands the causes of loss for computers and mobile equipment.  Insuring your device through your existing homeowner or renter’s policy might be a better bet. Give your agent a call.

Evaluate Your Exposures

Only you can decide whether or not insurance is the right option.  For accident-prone people who tend to lose or damage devices; the decision is a no brainer.  However, if you’ve been using the same device for a year or two, maybe you should reconsider your insurance plan.

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Category: Mobile Technology

About the Author ()

Felicia (aka Low Tech Grandma) is a wife, mother, grandmother, freelance writer and low tech blogger.

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