Should you buy cell phone insurance?

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man holding cell phone with cracked screen
Image Credit: Dreamstime
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You can get insurance on just about anything these days. Cell phone insurance is often pitched as a real money saver for the accident prone who frequently drop their phones.

In this article, we’ll explain how a typical cell phone insurance policy works, what the major wireless carriers charge for these plans and we’ll suggest some cheaper alternatives.

Here’s what you need to know about cell phone insurance

Picture this: You’re at the cell phone store. You buy a phone, select a plan and then the salesperson tries to get you to add on a cell phone insurance policy.

Or, you do the whole process online and get a message urging you to add the coverage.

Either way, you’re stuck with the same dilemma: Should you add the policy or not? Turns out money expert Clark Howard isn’t a fan.

“You should never insure something that is a consumer item,” he says. “People always worry about insurance on narrow things instead of the big things in life they really need it on.”

“As a general rule, people are emotionally drawn to buying insurance on fun things like a TV, cell phone or gaming console. It’s this psychological thing where the phone becomes so important to us that we feel like we should insure it.”

But there are some compelling reasons why you should consider skipping the cell phone insurance from your wireless carrier…

Table of contents

How cell phone insurance works

Cell phone insurance promises to repair or replace your device when the chips are down. There are two basic ways to get the coverage — either through your wireless carrier as an add-on fee to your monthly bill or through a third-party monthly subscription service.

AT&T and Sprint rely on a company called Asurion for their smartphone insurance business, while T-Mobile and Verizon use Assurant for the same purpose.

Both of those main players promise next-day replacement in a number of scenarios:

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  • Loss
  • Theft
  • Physical damage
  • Liquid damage
  • Mechanical defects after the manufacturer’s warranty ends

These plans through the major wireless carriers tend to run anywhere from $100 to $200 annually. Should you make a claim, you then have to meet a deductible of anywhere from $50 to $300, depending on your device, before coverage kicks in.

But here’s the real kicker: After paying all that, you often get a refurbished replacement phone — not necessarily a new one!

The other way to get insurance on your smartphone is to purchase coverage separate from your wireless provider. AppleCare+ (exclusively for iPhones) and Square Trade, which offers protection for both Android and iPhone devices and is owned by Allstate, dominate in this area.

Cell phone insurance plan comparisons

Here’s what you’ll pay with the Big 4 wireless carriers for smartphone insurance. All numbers are for coverage on a single phone.

Carrier plan
Monthly charge Deductible Cost of cracked screen repair
AT&T Mobile Insurance $8.99 $25-$299 $49
Sprint Complete $9-$19 $25-$275 $29
T-Mobile Protection <360> $7-$15 $20-$275 $29
Verizon Total Mobile Protection $10-$13 $19-$249 $29
Meanwhile, the monthly premiums for AppleCare+ range from $10 to $15 a month, while deductibles run anywhere from $29 to $269 per incident. Square Trade, on the other hand, only charges $8.99 a month with deductibles ranging from $25 to $149 per claim.

Alternatives to cell phone insurance

Without a doubt, the coverage these plans offer to protect you against loss, theft or damage to your phone is important. But here’s the thing: There’s a cheaper way to get the same protection! Below we outline three of them:

1. Free cell phone insurance from a credit card

There are more than a dozen credit cards that offer free cell phone protection when you pay your monthly bill with their card.

Wells Fargo leads the pack with seven different cards offering this benefit. Each features a $25 deductible and up to $600 of protection for damage and theft. However, they won’t cover loss of a phone.

But, thankfully, Wells Fargo isn’t the only one with these kinds of benefits; at least four other banks also offer free cell phone insurance on some of their cards. You can see the full list here.

2. Get a case

Instead of paying for expensive cell phone insurance each month through your wireless carrier, why not get something like an Otterbox? It’s a protective case for smartphones that some might consider clunky, but really protects your smartphone in the event that you drop it.

You can get a protective case like this on a discount site like eBay or Amazon. But even if you pay full retail price — which based on our research can be about $30 to $50 for an Otterbox iPhone 8 case — it’s still a lower cost way to protect your phone than traditional cell phone insurance.

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Oeago is another brand of smartphone case that tends to be more reasonably priced. Some of their cases start at under $10!

The bottom line is that any case you put on your phone is better than no case at all.

3. Try a repair shop

Here’s another thought: Try a local cell phone repair shop when your phone breaks, especially for replacing a cracked screen. They’re spreading like wildfire across the country and typically specialize in Android and iPhone repair.

Repairs tend to price out somewhere between $99 and $150 at these shops. That’s based on our calls to two shops in metro Atlanta for a cracked screen repair of a Moto e5 Play (Android). That turns out to be cheap compared to the alternative of insurance through your wireless carrier.

Final thought

Between the high monthly cost, the deductible you have to pay and the fact that you often get a refurbished phone, smartphone insurance isn’t the exactly what it’s cracked up to be — pun intended!

“The best insurance you can have for a cell phone is to put a protective case on it and a screen protector and not buy any insurance,” Clark says. “Or you can use a credit card that comes with cell phone protection for free.”

Meanwhile, if you’re looking for the best cell phone plans and deals, then be sure to check out our comprehensive guide. It’s updated every month!

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