Do You Need Cellphone Insurance?

Communicating in the age of the smartphone

Cellphone insurance may be worth it if the cost of replacing your phone would put a strain on your finances. And, with the pricetag on the latest smartphones topping $1,000, that's not a rare situation. Insurance might help cover you if your phone is lost or stolen, or if it's accidentally damaged. However, cellphone insurance plans can vary widely—both in terms of their cost and coverage—so it's best to understand what the terms are before signing up.

How Does Cellphone Insurance Work?

You may be able to buy cellphone insurance or protection plans through phone manufacturers, wireless carriers, insurance companies, retailers and other third-party providers. Insurance options tend to work in similar ways. Typically, you'll:

  • Pay a monthly premium for the coverage, or prepay for a longer period.
  • Be covered for incidents that may include accidental damage (even water damage), battery failure, theft and loss.
  • File a claim after a covered incident. The insurance company may have a technician fix the phone, reimburse you for repair costs or ship you a replacement.
  • Pay a deductible for each claim, which can depend on your insurance plan, phone and the type of incident. Deductibles could be up to several hundred dollars.

As you're considering your options, it's important to look at how each plan differs. For example, some options don't cover loss and theft, and many plans limit how many claims you can file. Also, you likely have your own unique coverage needs. Maybe you tend to drop your phone a lot, for instance, so you prioritize coverage for damage over a plan that has robust loss and theft coverage.

How to Decide Whether You Need Cellphone Insurance

Deciding whether you need cellphone insurance can be difficult, especially when being without a working phone can really complicate life. But the most common types of damage won't necessarily leave you without a phone.

A 2018 survey from SquareTrade, an Allstate company that offers protection plans, found that 66% of smartphone owners damaged their phones during the previous year. However, cracked and scratched screens were the most common types of damage, and over a third of smartphone owners report they didn't get their screens fixed.

One of the most important questions you may want to ask yourself is how much replacing your phone will cost. If you're the type of person who always has the latest-edition smartphone, an insurance plan that includes loss and theft coverage may be worthwhile. But if you tend to rock a phone from a few years ago or opt for budget models, it might not be worth paying for insurance. Plus, older and less-expensive phones can also be cheaper to fix.

Another important consideration is who will be using the covered phone—or phones. Insurance might make sense if you're accident-prone or tend to be forgetful, or if you're buying insurance to cover a teen's smartphone. A cellphone insurance plan might also get a lot of use if there are kids in the house who see a cellphone as a plaything.

Cellphone Protection Plans by Providers and Phone Makers

You'll want to compare cellphone protection plans and insurance options as soon as you get a new phone or change carriers. Some options are only available within 30 or 60 days of making a purchase or activating your services.

You may be able to secure coverage in a variety of ways, including through your wireless provider. In many cases, though, the company you buy coverage from and pay your premiums to is acting as an intermediary between you and the actual insurance company.

For example, if you buy cellphone insurance through AT&T, Verizon, T-Mobile, Amazon, Best Buy, Costco, Samsung or many other phone retailers and cellular service providers, you might wind up filing a claim with either Asurion or Assurant—two popular insurance companies.

But even when the insurer is the same, the plan options and costs could be different. For instance, the amount you'll pay out of pocket before coverage kicks in (your deductible) can vary greatly from one plan to another. Here's a quick look at some of the popular options:

  • AppleCare+: Apple offers two extended warranty programs for its iPhones. AppleCare+ covers up to two incidents of accidental damage every 12 months with a $99 service fee ($29 for screen damage) per claim. There's an optional AppleCare+ with Theft and Loss coverage, which has a $149 deductible per theft or loss claim.
  • AT&T: AT&T offers a mobile insurance plan that costs $8.99 per mobile number, has a $49 screen repair deductible and allows for up to two claims every 12 months. There are also protection plans for either one device or up to four devices that allow for more claims, have a lower screen repair deductible and come with extra benefits. Both options include loss and theft coverage.
  • Samsung Care+: The Samsung Care+ coverage will cost $3.99, $8.99 or $11.99, depending on the device you're covering. The program allows for up to three accidental damage claims per 12-month period, and there's a $29 cracked screen repair deductible. However, coverage for loss and theft isn't included.
  • Squaretrade: One of the most popular third-party providers, Squaretrade has individual device plans for $8.99 a month per device (up to five) and family plans (up to four devices) for $19.99. You can enroll at any time and protect new or used devices. You can file up to four claims (eight with the family plan) per plan, but there's a $149 deductible per claim and loss and theft aren't covered.
  • T-Mobile: T-Mobile has a basic device protection plan and a Protection <360> plan, with the monthly costs and deductibles varying depending on the plan type and device. The basic plan covers hardware servicing, accidental damage, loss and theft, while the upgraded plan includes unlimited screen repairs, AppleCare services for Apple devices and other benefits.
  • Verizon: Verizon offers seven types of plans, ranging from a basic extended warranty to a multi-device plan that comes with identity theft monitoring. Most options include loss, theft and damage coverage, along with battery replacements and unlimited cracked screen repairs (with $29 deductibles). However, the monthly cost and deductibles can depend on the type of device, and how many devices you have (for multi-device plans).

Alternatives to Cellphone Insurance

Purchasing a cellphone insurance or protection plan isn't the only way to protect your purchase. Here are some other options that you might want to use instead of—or in combination with—a cellphone insurance policy.

Homeowners or Renters Insurance

Your homeowners or renters insurance policy may cover your personal items if they are stolen (even if they're not stolen from your home), or damaged during a covered incident, such as a fire. However, there may be a limit to how much your policy pays toward off-premises thefts. You'll also need to pay the deductible, which could range from $500 to $2,000 and limit the benefit if someone only steals your phone.

Cellphone Protection Through a Credit Card

Some credit cards include cellphone insurance as a cardholder benefit. If you pay your cellphone bill with the card, you get the insurance for free. The coverage could extend to everyone on a shared or family plan, which leads to even more savings when compared per-device cellphone insurance plans. There may be a limit on how many claims you can file each year, and there's often a per-incident and annual limit as well.

Extended Warranty and Purchase Protection Through a Credit Card

Many credit cards include an extended warranty benefit that can double the manufacturer's warranty on your purchases. The benefit only applies if you use your card to make the purchase. And the limits and coverage can depend on which card you use.

For example, the benefit may only apply when the original manufacturer's warranty is for less than three years, and the maximum extension could be an additional year or two. Manufacturers' warranties also won't help to repair or replace your phone if it's accidentally damaged, lost or stolen. However, the extended warranty could be helpful if your phone has a defect.

Additionally, some credit cards offer purchase protection on your purchases, which may reimburse you if your phone is lost, stolen or damaged. The coverage typically only lasts for 60 to 120 days, but there's no extra cost to receive the benefit. But some cards have a per-claim limit of $500, which may be less than your new phone's value.

Independent Repair Shops

Similar to how going to a local mechanic can be cheaper than taking your car to the dealership, you may be able to save money by bringing your broken device to an independent repair shop. If you're DIY-minded, you can also buy a repair kit and follow along with online tutorials to get your phone working again.

Pay With Cash

Rather than spending $10 a month on insurance, you might instead set the money aside in a phone-repair fund. It might not cover the entire cost of a repair, but it'll help reduce costs. Go without needing a phone repair for long enough and you might even save enough to buy yourself a new phone.

Compare Your Options and Run the Numbers

There are a few situations when you definitely don't need cellphone insurance. For example, when replacing your phone costs about the same as the deductible. But for many people, having an insurance policy might save them a lot of money—which can make it harder to decide whether it's a good idea.

Ultimately, you might decide against insurance and simply commit to being careful. Some extra gear can help too—a case and screen protector won't protect your smartphone from everything, but a modest investment in protective gear could help prevent cracks and scratches, two of the most common types of damage.

If you're considering buying a policy, first look at your insurance and credit card benefits to see if you already have enough coverage. If not, compare the insurance plans' coverages, premiums and deductibles. Then, consider the financial impact of paying for insurance versus replacing or repairing your phone, and decide what makes the most sense for your household.