So you got a shiny new phone and have now been convinced by the Store Clerk to purchase a Cellphone insurance plan. You do realize they are comped for making that sale. If not, you do now. I wlll go on to explain why Cell phone insurance plans are a horrible idea and should only be used for a handful of very expensive phones.
As with everything you need to look at the fine print. I have done some of the research and for this particular blog, I am only going to concentrate on Apple’s iphones and Sprint’s Insurance plan from Assurion. Keep in mind the Asurion is the insurance provider for AT&T, Sprint, T-Mobile and Verizon among others.
I was able to get all the information from http://www.phoneclaim.com/documents/Sprint/Sep2014SprintDeductibleSchedule.pdf This document contains all the deductible information and charges for the plan. You can go to Asurion,com and try to get the information on other carriers and cellphones.
For Sprint the phones are divided into 5 Tiers each with their own deductible and monthly fee. http://www.phoneclaim.com/documents/Sprint/Sep2014SprintDeductibleSchedule.pdf
| Deductible | Total Equipment Protection Monthly Charge | |
| Tier 1 | $50 | $8.00 |
| Tier 2 | $100 | $8.00 |
| Tier 3 | $100 | $11.00 |
| Tier 4 | $150 | $11.00 |
| Tier 5 | $200 | $11.00 |
So what iphones fall under which Tier
1) Tier 5 – $200 deductible and $11 Monthy TEP
iPhone 4S 16GB, iPhone 4S 32GB, iPhone 4S 64GB, iPhone 5 16GB,
iPhone 5 32GB, iPhone 5 64GB, iPhone 5S 16GB, iPhone 5S 32GB,
iPhone 5S 64GB, iPhone 5C 32GB, iPhone 6 16GB, iPhone 6 64GB,
iPhone 6 128GB, iPhone 6 Plus 16GB, iPhone 6 Plus 64GB, iPhone 6
Plus 128GB
2) Tier 4 – $150 deductible and $11/month TEP
iPhone 5C 16GB
3) Tier 3 – $100 deductible and $11/month TEP
iPhone 4 8GB, iPhone 4S 8GB, iPhone 5C 8GB
It is interesting to note that the iphone 4s 16gb has a $200 deductible, same as the much more expensive iphone 5 plus and the the iphone 5c 16gb has a $150 deductible. Goes to show how unpopular the iphone 5c really was.
Now lets take a few scenarios. Keep in Mind that the scenarios are for October 2014. The scenarios change with time
Scenario 1 – I lose my iphone 6 16 gb phone after 2 months – Original Cost is $650. I can get it replaced for $200 deductible. My total outlay for the insurance is $11/month for 2 months = $22 + $200 for the deductible for a total cost of $222. Worth it as those phones are still expensive and running $650. Would even be highly recommended if you had the iphone 6 plus 128gb version as that phone runs $949 + tax.
Scenario 2 – I lost my iphone 5s 16 gb after 9 months. Original Cost of the phone was $650. I can get it replaced for $200 deductible and I paid $11 for 9 months. Total paid out for a replacement is 11×9 + 200 deductible = $299. It is not worth it. Why?
Well for one, the phone has depreciated and you can get a used phone 5s on swappa.com for under $300.
Somewhere in the 6 month to 1 year window after the release of the iphone, the insurance plans start getting expensive for the consumer and extremely beneficial for the insurance provider. Keep in mind that the iphones hold their value very well. The Android phones do not, they depreciate much faster and their window may not even last the first 6 months.
Things to keep in mind when purchasing Insurance plans
- Your carrier gets a cut of the monthly fee. It is a revenue stream for the carrier. They incent the sales reps into selling them.
- The person selling it to you is being comped for that sale. Don’t expect the whole truth from them. They are just trying to get their commissions. That is why they are so overzealous in convincing you that you need insurance. They have quotas to meet. See bullet 1.
- If you see an insurance plan added to your account without your knowledge and or consent, now you know why 🙂
- Once you add the monthly premiums, the deductible and the depreciation. It might not be worth it.
- When you get the phone replaced – they will send you a used phone which may not work perfectly. They will not send you a new phone but a refurbished phone and it might not be factory refurbished. The logic used is – well you lost or destroyed a used phone so we are replacing it with a used phone. There even has been an instance where Asurion sent a replacement phone that was reported stolen!.
- When you have to make a claim – the insurance company becomes the bad guy and the carrier that has been collecting the monthly payment, washes their hands off the issue – leaving you with an extremely bad taste in your mouth.
Your mileage on whether the insurance plans are worth it will vary. I would highly recommend you do the math and look for the current replacement prices on swappa.com
Short link to this page http://bit.ly/1wY34vg
jackmehra 
these are cellphone insurance plans…..
I’m impressed, I have to admit. Seldom do I encounter a blog that’s both educative and interesting, and let me tell you, you have hit the nail on the head.
The issue is something which not enough folks are speaking intelligently
about. Now i’m very happy that I came across this in my search for
something relating to this.
Here’s a scenario to add:
Pay for 11 months, drop phone and get a cracked screen.
11+$11 + 200 = $321 for a cracked screen?! you gotta be kidding me.
dropped my insurance like a rock today. will support local business and pay $90 to replace the screen in an hour.