Wireless Companies And Phone Insurance

This year, mobile technology insurance contracts and premiums will bring in a total of about $12.14 Billion dollars for 2013 for wireless providers, manufacturers, and retailers, up from $5.1 billion only four years ago. The total number of devices insured is approximately 133 million, or almost 40 percent of all devices. (WarrantyWeek.com) It would seem that insurance is a good idea, since the average device can cost $500-$650 off-contract, brand new. But, if we look at the cost of insurance and alternative methods of protecting devices, we see that maybe insurance isn't all that great. 

AT&T, Verizon, T-Mobile, and Sprint all offer insurance plans with various pricing tiers depending on the value of your device and the fullness of your coverage. Let's take a look at what you'll pay for insurance for a Galaxy S4 for each of these plans if you lose or destroy your phone one year into your contract. (All of these values are taken from Androidpolice.com)

AT&T: AT&T offers a plan of $7.00 a month with a $200 deductable. You have a limit of two claims per year up to $1500.

Total cost: $284.

Verizon: Verizon offers a plan of $10.00 a month with a $100 deductable. You also have the same claim limit.

Total cost: $220

T-Mobile: T-Mobile offers insurance through a different insurer, but the pricing is about the same: $8 a month, unless you are enrolled in their "JUMP!" program, which includes insurance in its $10 add-on to your contract. Deductables are anywhere from $150-$175, so let's assume that the GS4 is now $150. There is a two-claim limit as well.

Total cost assuming you already use JUMP: $150/$270

Total cost w/o JUMP: $246

Sprint: Sprint offers a plan for $11 a month and a $150 deductable. The limit is three claims a year for $1500, though, which is a big advantage over the other providers.

Total cost: $282

There are also some third-party companies that will offer you insurance, such as Best Buy ($270 month-to-month, $350 with two-year coverage), Square Trade (no theft coverage) ($196 M2M, $225 2yr), Worth Ave Group ($109), and Ensquared ($160 1yr, $200 2yr). These contracts may be less trusted than the wireless providers' contracts, but they are much better deals.

Now, onto the question we all want answered: is it worth it? If you are extremely forgetful or clumsy, possibly. However, if you are the average smartphone user, probably not. Most new phones come with a warranty for about a year, so let's assume the problem isn't a misfunctioning device, but a device broken in the most common fashion: broken screen. Let's say you purchase your GS4 unlocked, brand-new for $500 over Black Friday. You want to keep it safe, so you buy the JUMP plan from T-Mobile for $10 a month. One year later, you drop your phone and it shatters. So, you pay $150 for a new device. All in all, you have had two phones and paid $770. Now, let's say you didn't buy insurance and your phone still breaks. You can choose to have it fixed for about $100, or fix it yourself if you have the skills for $50. Or, you can sell it for about $250-$300 and buy a new one for $500 (new) or $400 (used). If you went about it this way, you could spend anywhere from $550-$700 to get a "good-as-new" device. This is a more difficult method than just subscribing to insurance and filing a claim, and it's been said that "you can't pay enough for convenience." However, I disagree. $220 is too much for convenience. If you think that this method is less of a deal because the phone you get won't be new, think again: most insurers will give you a refurbished or used phone and may not even give you the same model back. Also, keep in mind that a brand-new Otterbox Defender case can be bought for $20 on eBay, which is much cheaper than replacing a screen. As far as having your device stolen, many manufacturers are trying to include a remote shutdown switch that will render the device useless if stolen to dissuade potential thieves from pilfering your smartphone (if wireless companies don't try to keep that from happening.)

Based on these facts, maybe you shouldn't spend all of that money on insurance. Even is you set aside $10 a month as a "just in case fund," you could more than pay off the cost of a repair for a screen. If you don't break the phone, then you've an extra $120 set aside this year. I don't use insurance with my phone, and I don't necessarily recommend it now that I've see the data. Again, if you or your family is unusually forgetful or clumsy, it may be an idea to consider, but that's up to you.

Do you have insurance on your phone? Give us your opinions in the comment section below.