Should you get Smartphone Insurance?

samsung_phone_cracked-a9eebab88f4542a745a166c51250833bThis is a question I ask myself whenever I upgrade or buy a new smartphone. With the average list price of a smartphone costing upwards to $800-$1000 US these days (similar to a laptop!), do you also need to buy insurance to protect your investment? Unlike a laptop, you’re more likely to drop your smartphone or get it wet because you carry it with you almost the entire day. Although I’ve only dropped my smartphone three times in the last 5 years or so, most people drop their phones on a regular basis. For example, my two teenage nieces have iPhones and they’ve drop their phones numerous times; cracking the screen, breaking the display, and once my niece even ran over her phone in her car! In their situation, they took their iPhones to a nearby fixit shop which changed out the broken class for $150.

In my case, I just purchased a Samsung Galaxy S6 which cost nearly $800, so I wanted to protect my investment with some kind of insurance. Even though I rarely drop my phones, my concern was glass breakage (since there is glass on both the front and back of my S6), and water damage. Also, any possible damage to the LCD touch screen display due to drops or falls. Theft and loss wasn’t a concern, since I usually keep my phone in my front pants pocket and I’ve never lost a smartphone before. So, I surveyed a few common insurance options to see what would be the best for my situation.

AT&T’s Protection Plan (Asurion)

Nearly all cell phone carriers offers a protection plan where they apply a small monthly charge to your bill and you pay a deductible when you make an insurance claim. With AT&T, the cost is $6.95/month and with each claim you pay $199 (their plan covers damages and loss/theft). If you read terms and conditions of this coverage, you’ll see that AT&T uses a company called Asurion which handles the insurance claims. So, AT&T doesn’t provide the insurance coverage directly. Asurion will provide you with a refurbished phone or at their discretion provide you with a similar phone. The word “similar” could mean a phone of a different color or style, or even an entirely different model. They say this clause in their agreement is necessary in case your particular brand of phone doesn’t exist anymore, however, it also gives them freedom to provide you with any similar smartphone under this coverage plan. I’ll have to note, that the deductible for this plan starts out at $199 per claim, but it drops to $150 after 1 year and $100 after 2 years.

Personally, paying $6.95/mo and having a $199 deductible is rather expensive if I’m wanting insurance for glass breakage and/or water damage. And the fact I’m getting a refurbished unit from an insurance company really bothers me, especially after I’ve read numerous complains about Asurion’s service and practices.

If we use the scenario where I keep my phone for two years and I need to file a glass breakage claim within the first year, the cost would be $6.95 x 24 months + $199 = $365.80.

SquareTrade Protection Plan

SquareTrade is a very popular insurance company that provides coverage for Smartphones. If you check out their website, you’ll see that their most affordable plan costs $99 for two years of coverage with a $75 deductible per claim. Unlike AT&T, SquareTrade does not cover loss or theft, just physical damage (including cracked screens and water damage). So, this plan sounds pretty good until you read the terms and conditions. Similar to Asurion, you’ll see the clause, “Replacement parts will be new, rebuilt or non-original manufacturer’s parts that perform to the factory specifications of the product at Our sole option.” Also, at SquareTrade’s discretion will repair your damaged product or provide a cash settlement or a Gift Card reflecting the replacement cost of a new product, or replace your product with a product of like, kind, quality and functionality. So similar to Asurion, they have a lot of leeway on how to fulfill your claim request.

If we again use the scenario of keeping the phone for two years and filing one glass breakage claim within the first year, the cost would be $99 + $75 = $174, which is about half the cost of the Asurion plan.

Now, there’s several other protection plans available by other companies which are similar to Asurion and SquareTrade. Some are cheaper, some are more expensive, but they all seem to operate with similar terms and conditions. If you do a Google search of all of these companies, you’ll come across a lot of complains on service and length of the repair or reimbursement, etc. I personally want to avoid all those hassles and just have my broken smartphone fixed.

Samsung Protection Plus Mobile Elite Plan

A third option, is to sign up for Samsung’s own protection plan. This plan is basically an extended warranty for your Smartphone that also covers breakages from drops and water damage. Under this plan, you pay $99 for two years of coverage and a $75 deductible per claim. Also, if at some point you decide to cancel your coverage Samsung will refund you a pro-rated amount depending on when you cancel (SquareTrade does something similar).

In Samsung’s terms and conditions they will send you a refurbished unit within two days of approving your claim, and you return your damaged unit in the mailing box. Although they are providing a refurbished unit, I do feel more comfortable receiving such a unit from the manufacturer rather than a 3rd party insurance company. My belief, is that Samsung is a manufacturer that makes products and they want to keep their customers satisfied and buying more Samsung products since that is what generates revenue for them, while insurance companies like SquareTrade and Asurion generate revenue by customers not filing claims. I would think that Samsung has a big incentive to providing a top-notch refurbished unit versus what SquareTrade or Asurion would provide. But again, I’ve never filed a claim with any insurance company so I’m only speculating based on what I’ve read in online comments by other customers.

Examining our same glass breakage scenario, the cost would be $99 + $75 = $174, which is the same as with SquareTrade.

Local Fix-It Shops

Another viable option is to not get any insurance, and repair your phone when it gets broken. I live in the Seattle area, and there’s a popular shop called Jet City Repair which does iPhone and Samsung phone repairs. From their website they don’t have the Samsung Galaxy S6 listed (probably because it was only released two weeks ago), but cost to replace the glass front for a Galaxy S5 is $149. To replace the glass front, LCD screen and digitizer is $279. They state they can do the repairs usually in the same day, which is convenient. So, this is a viable option in case you opted out from getting insurance but need to have your damaged phone repaired. Of course, if dropping your phone caused more damage than just broken glass or LCD screen, who knows what the repair costs would be.

Conclusion

So in the end, insurance is something you buy for your own peace of mind. You’re paying a small upfront fee to avoid having to pay a huge replacement price later. Some people feel safe having insurance, while others feel paying the insurance fee is just a waste of money.

Personally, I decided to go with the Samsung Protection Plus Plan. My biggest fear is dropping my phone and breaking either the front or back glass. I’m going on a big 3-week road trip later this summer, and I’m concerned with drops and possible water damage during my travels. Paying $99 for Samsung’s extra coverage is worth it to me. I can always cancel and get a pro-rated refund if later I decide to drop coverage or upgrade to a new phone in 18 months or so. I also feel better getting a refurbished unit from Samsung rather than Asurion or SquareTrade.

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