If you’ve ever purchased a cellular phone, there’s a good chance you’ve also purchased phone insurance. This is a standard option when you buy a phone, and you might think it’s a good idea. After all, you may be spending several hundred dollars on a phone that might end up in the toilet, and if it does, you’re out several hundred dollars. Furthermore, many companies only allow you to purchase insurance within a few days of purchasing the phone. This makes for a tough decision: Do we opt-out or do we fork over several bucks a month in case of an accident? Well, if you’re looking to be smart in the long run, the choice is simple.
Phone insurance is a lot like car insurance; A more expensive car will cost more to insure, as will a more expensive phone. However, phones are similar to cars in another way, they depreciate. Your new phone will lose value once it’s not a new phone anymore. This is what many people don’t realize in the months after they purchase a new phone, and over time, the insurance on what was a new phone can become a very bad deal. And if you are still unsure, there is a blog for those weighing their options for life insurance and phone insurance that you can check out to learn all about the benefits of getting your phone insured and how you can get the lowest premium on your phone.
Back in 2019, I needed a new phone that could send picture messages. I ended up with a Samsung T509, which was probably worth around a hundred bucks. When I got my phone, I let the salesperson convince me to get it insured, and At $5.99 a month, it seemed like a modest deal. So I bought insurance. Then the big day came. I was trying to get in shape and I dropped a weight on my phone and cracked the whole screen in half. I never thought it would happen. No problem! I called up Asurion and filed a claim. No problem for them either, I simply pay the $50 deductible and a brand new phone is in the mail within days.
But let’s think about this for a second. My phone was worth a hundred dollars, and I paid half the cost as a deductible. Well, that alone might have been a good deal, but the problem was that I had my phone for over a year. At $5.99 a month for 12 months, it costs $71.88 to insure a $100 phone for 12 months. When you add in the deductible, you’ll see that I paid $121.88 for a new phone. Does this make sense? Not at all. It only makes sense if you break your phone, on average, once every 8 months or more.
Let’s go a step further. I am content with my phone and plan to have this model for a long time. Today, however, you might be able to pick up a Samsung T509 for less than 40 bucks. This means that insurance would be a ridiculous investment. The only time insurance would be a good investment is when you are constantly buying an expensive new phone every year and are very clumsy.
So what’s the big deal with phone insurance anyways? Aren’t phones an important part of our life that we need to protect? Well, yes, but here is the difference: When we get into a car accident or fall down a flight of stairs, we can’t really afford to just buy a new car or pay for our broken bones, that’s usually beyond our means. Most phones, on the other hand, are just not expensive enough to make them worth taking out an insurance policy. No phone is so expensive that we can’t go out and buy another one if we need to. Perhaps instead of purchasing insurance, we should make a piggy bank and collect the money we would otherwise have foolishly squandered.