Is Cell Phone Insurance Worth It?

broken iphone womanNowadays, it’s nearly impossible to leave the house without seeing someone check their email, play a quick game of Angry Birds, or look up reviews for a restaurant on their phone. Thanks to the many innovations in mobile technology over the last five years or so, smartphone usage has become ubiquitous.

However, along with their impressive functionality, smartphones come with a higher price tag. Fortunately, the majority of these costs are absorbed by your carrier. That $200 iPhone or Android you paid for would be closer to $600 if you bought it completely unsubsidized without committing to a two-year contract.

But, unfortunately, there’s a lot that can happen to your phone during your contract period. It could fall into the toilet, slip out of your hand and onto the pavement, or accidentally get left behind somewhere, never to be seen again. Ordinarily, when this happens, you’re on the hook for replacing your phone – which could cost hundreds of dollars. Ouch! So how can you mitigate the cost of replacement if you lose or break your phone?

The obvious answer is to sign up for cell phone insurance when you get your new phone. For approximately $7 a month, depending on your carrier, you get your phone replaced if anything happens to it, whether or not it’s your fault. Seems like a great deal, right? Not exactly.

Why You Shouldn’t Buy Cell Phone Insurance

Anyone who can do basic math might notice that the $7 per month you pay for insurance adds up very quickly. Over the course of your contract, you’d end up paying $168 for a service that you may never use.

“That’s fine,” you say. “I’ll just ‘accidentally’ lose my phone a year in, so that I’ll take advantage of my insurance and get a brand new device.” Better think twice about that too. When you get your phone replaced, you’re required to pay a deductible which can range anywhere between $50 and $200, and you’re not guaranteed to get a newer or better phone in return. In fact, it’s not even guaranteed you’ll get the same phone or even an unused one.

So at this point, you’ve paid for two years of insurance ($168) plus your deductible (probably $100), all for a device that might not be as good as the one you started out with. Now to some people, this may still sound like a good deal. If you’re shelling out $268 instead of $600, you’re up $332 – if that’s how you want to think about it. There are , however, a number of better and more economical alternatives to consider.

broken cell phone sand

Cell Phone Insurance Alternatives

Get a Personal Articles Insurance Policy

Many people don’t realize that they can get their phones insured elsewhere. Instead of paying $84 a year, a regular insurance agency may offer to cover your phone at a price that’s less than half of that. Simply call an agent and ask to take out what’s called a “personal articles policy” on your phone.

One other benefit to going this route is that, more often than not, you won’t even have to pay a deductible. Once you file a claim, you’ll simply receive a check to use toward the purchase of your replacement phone. Another advantage is that you’ll likely choose which phone to replace your old one with or, at the very worst, you’ll get the same model back. But if you take out a policy provided by your carrier, you may end up with a not-quite-as-good refurbished model.

That said, make sure you understand how this type of policy works before you sign. Terms can be slightly different depending on the insurance agency you go with and the premium, so ask your agent a few questions first:

  • Will there be a deductible?
  • What kind of losses are covered? If you drop your phone and it shatters, will it be replaced? What about water damage?
  • How will your phone be replaced: Will you receive a check for the same amount you paid for it? Or something less to account for depreciation?

Don’t Insure Your Phone at All

Even though taking a personal articles policy might be great for peace of mind at a reasonable price, it’s still a sunk cost if you’re generally careful with your possessions, especially ones as expensive as most smartphones are nowadays. In general, I assume most people fall into this category. I personally have never lost a cell phone and can probably count on one hand the number of people I know who have. Still, accidents happen, even among the best of us. What do you do then?

1. Buy a Used Phone
Instead of shelling out your hard-earned money for a brand new phone, think about purchasing one second-hand for considerably less. Let’s say you own Google’s Nexus S phone. Off contract, as of this writing, a new one will set you back $530 from Best Buy, which is the only place you can buy it new. That’s a pretty hefty chunk of change. However, if you’re willing to buy a pre-owned one, it’s not difficult at all to find one under $225 in like-new condition with zero scratches on sites like Craigslist,, and eBay. All it takes is a few minutes of your time to dig up some great deals.

2. Pay Yourself the Monthly Insurance Cost
Another alternative is to pay yourself the monthly insurance cost to create a small cushion in case you do need to replace your phone (i.e. emergency fund). This may not cover the entire expense of replacement, but then you still have the money if you make it through the entire two-year contract with phone in hand.

Final Word

Long story short, just think of cell phone insurance as those evil green pigs that are out to get you in Angry Birds. You’re ultimately better off without it in all likelihood, but if you absolutely must, get your phone insured elsewhere.

Have you ever bought cell phone insurance? If so, have you ever had to use it? What other alternatives are there in case you lose your phone?

This is a guest post by Kenny Kraisornkowit, who offers shopping advice, product reviews, and ways to save money on tech gear and gadgets at Savoo, the U.K.-based version of the popular deal site,

  • Joshbott

    I agree with the write. For the most part the insurance from your carrier is a rip-off. Wells Fargo Bank credit card has a deal where if you pay your cell phone bill through their credit card, they will insure your phone up to $200.00 w/ a $50.00 for free. I got this route and dropped the carrier insurance. I didn’t know you could get personal articles insurance and might check that out.

  • Crystal @ Frugal Living

    I didn’t get cell insurance, my phone got stolen while I was donating blood 2 months later, and I was really happy I bought my phone using my Discover Card since they reimbursed my $350 loss after tons of paperwork…

  • Megscole64

    I have to say though that I have best buys cell phone coverage and had to use it when my cell phone died. I had a blackberry and the retail value was $400. I was not due for an upgrade but was able to apply that $400 amount to any phone I wanted. No deductible.

    I never knew you could add a phone to a homeowners policy though and am definitely going to look into that. :)

  • Benjamin Metzler

    It depends on the phone. An iPhone 4S is $399 with a contract and $849 without. If I drop a subsidize phone in water, I’m still locked into my 2 year contract and it will cost me $849 to replace the phone. $99 for AppleCare+ or SquareTrade seems like a bargain. Neither covers loss or theft, but I’m more likely to drop my phone then have it stolen (of course now my phone will get stolen :-).

  • J.B @ My university money

    Great post! I was offered the insurance but I got the phone just after I got my tenant pack, and it includes personal belongings.

  • Anonymous

    By paying for your phone bill with your Credit Card, many Credit Card companies will actually provide the Cell Phone Insurance for you. If your phone becomes damaged, simply contact Visa/Mastercard rather than your provider. Most people aren’t aware of this little Credit Card perk.

  • Don W Mayfield

    Personally I just keep my old phone as backup in case I loose my phone.

  • Toastypostage

    Thank you for this article! I just looked into “personal articles” insurance for my phone and went out and got it the same day. For my Samsung Galaxy II S, AT&T was going to charge me $7 a month with a $200 deductible. Through my insurance company, I got my cell phone insured and it cost me $25 a YEAR with NO DEDUCTIBLE. This covers damage, lost/stolen, water damage, and everything else except manufacturer malfunction (which should be covered by the warranty). If anything happens to my phone, I let the insurance company know and they write me a check the same day for what the phone cost new. You saved me ALOT of money!

  • T

    I bought a HTC EVO 4G about a year after it came out, yes I know stupid of me to buy such an old device, but anyway, I paid sprint my $8 a month insurance premium with a $100 deductible if any damage not manufacturer related occurred and I had to have my phone replaced over 6 times in the course of my 2 year contract and I only shelled out the $100 1 time. Effectively having that insurance saved me about $2,000 because if I had been forced to replace the phone each time it would have been another $400 so I think it is a very wise investment but I’ll definitely be looking into the personal articles protection at my insurance company.

    • San

      This is not correct. There is a deductible each time you make a claim — and you’re limited to 2 claims per year. I’ve been a sprint customer for over 7 years.

      • lreillyi

        The 2 claims a year is only for electrical/manufacturing at no cost… you can have as many claims as needed. (I have had my phone stolen, broken, and then lost within 3 months… all 3 replaced with deductible.)

        • chicken Hunter

          Esecuritel only allowed 2 claims a year ….don’t know what insurance you have? And I’m pretty sure asurian is the same! Those are the only 2 insurance plans I’ve ever had!

    • Clint Craft

      If you only paid the $100 deductible once, then the other damage was manufacturer related? Wouldn’t those problem be covered under the manufacturer warranty?

    • Michael

      So you think these insurance companies save you money over the long term, if you damage your phone many times?

  • Lizzzz

    Thanks for the article. I should have read it BEFORE I bought insurance for $10.99 deducted from my checking account every month for the last 1 1/2 years. I was told by the Verizon sales rep that my phone if lost or damaged would be replaced for free. I was not told that an outside company called Esecuritel would handle the claim. When I called today to report my damaged phone, they told me I had a deductible and my new phone would cost $175.00. Well, the Apple store can replace my phone today right away for $150.00 plus tax. I cancelled the insurance on the spot. It is bogus. Thanks for reading.

    • chicken Hunter

      Tell me how apple is able to offer you that? Really curious?

  • Dr. Greg Baxter

    Agree with Lizzzz. After finding that I’ve been paying $7/month for the last 16 months, I decided to replace my ATT device, which although functional, had a cracked screen. I paid $199 deductible, and factoring in the money paid monthly to date, this has cost me somewhere near $320. Well, I reasoned, the old phone could be put to good use. Nope. Now they also want the damaged phone returned. I could have upgraded to a newer model phone, without monthly commitment, for $199. Why did I ever say yes to insurance? Why does anyone?

    • Jeannette Siukola Chwaliszewsk

      I have the same problem with ATT. My Android it is still functional, have a cracked Scree. I called Asurion, tyhey told me I have a $199.00 deductible.
      I was thinking to buy a phone thru Ebay or other store. Do you think I will be able to carry with ATT with my new phone? Even I did not buy from them directly? Thank you Help!!!!

    • chicken Hunter

      Lol so true!!

  • EWOlson

    I bought a phone with Cricket. I also got the insurance. The insurance cost me $5 a month. The phone cost me $250 and I had no contract. Month to month. Less than a year later the phone was stolen. I got the same model phone, new, for half the price I originally paid. $125. Well worth it for me. I still have the insurance and have never had to use it again, but it is nice to know it is there if I need it.

    • Clint Craft

      $5/month for 12 months is $60. Plus $125 means you paid $185 for what was a $250 phone at the time you bought it. I’m certain that a $250 phone after 1 year could be purchased for less than $185. Not to mention the $5 per month your throwing away since you’ve never had to use it again. Your better off putting $5 per month aside than giving it to some insurance company.

    • Tash/Livey

      Just know if you have 2 claims in 12 months they cancel your insurance

  • GotJ

    These phone insurance deals are mostly a rip-off. Do math and comparison to other insurance scenarios. Say compare to car insurance. Compared to an Asurion covered policy on major carriers ($10-15 a month for a $600 phone + $100-$200 deductible) that would be like paying $333 to 500 A MONTH for a $20,000 car with a $5,000 deductible. Of course, not exactly a fair comparison because with cars you pay long term where a phone is usually two years. Nonetheless, it still put some perspective on how much these phone policies add up. Those companies make a killing off these insurance plans. Just get used phone, get a nice cover case, and be responsible. Your incident rates will be low and you won’t be paying 50+% of your own phone’s value in just two years.

  • P. Mathews

    We had insurance on our kid’s phones and just canceled it. My son broke his, and with insurance it still cost more than $150 to replace. He could have bought an IPhone 4 on Ebay for the less than the cost, and we would be saving $30/month on three phones. Buying a used phone to get you through your contract period is much smarter. I could kick myself for the several years of unnecessary contributions to Asurion.

    • chicken Hunter

      Asurion is the WORST! SENT ME a Refurbished phone replacement , and within a week it had several problems , and they wouldn’t take it back because they said you have 15 days to return a phone they send you if It doesn’t work! Unbelievable! it should At least be 30 days to return a piece of junk they send you! But that is how they rip you off!!

      • Clint Craft

        Within a week is less than 15 days?

        • chicken Hunter

          After they sent us this refurbished phone from day one things were going wrong with it….when I tried to get them to take it back they said you have 15 days to return the phone ….after that , too bad!!! What sucks is my provider keeps doing third party buisness with asurian ….I am with verizon! How else am I supposed to obtain insurance when that’s the only option verizon gives you when you buy their phones?

  • verdulo1

    My daughter has an iPhone with Boost Mobile. Because she had her last phone stolen (even though she was VERY careful with it) we decided that insurance was essential. I am writing this to warn others about Boost Mobile insurance. I am paying $7 every month, but when her screen cracked a month ago,she filed a claim. We were told that the replacement phones were on order and we would have to wait. That was a month ago!!! Unacceptable.

  • Shannon Keen

    I have insurance and you are all cheapskates. I pay $10 each for myself and my husband. We have each broken our phones once and paid the deductible. No problems. I do not want to buy a used piece of garbage phone from some stranger on ebay or craigslist. Sometimes you get a refurbished phone with problems, but considering how much these phones cost to replace, I would rather get one from a guaranteed reputable source. And there is a 14 day exchange. If you are too stupid to get a dud
    replaced within the exchange period, that is your fault. Not the insurance company.

    • chicken Hunter

      And sometimes your insurance carrier such asurian will send you a refurbished phone as your replacement. ….did u know that??? Oh yeah!! I have no problem paying for insurance , but when the monthly payments are $11.00 a month , and the deductible is $150.00 for my phone type , I damn well better get the same make and model right out of a brand new box!!! That’s what my bitch is about! And rightly so!!

    • Tash/Livey

      I felt the same way you do. I always carried insurance. But 9 months ago I paid a $100 deductible for a refurbished phone because parts of the phone quit working…essential parts. I was not due for an up grade for 4 months. Well 4 months later I get a new phone as the refurbished phone started doing the same thing. I think the phone couldn’t handle the everyday upgrades. So I get a new phone and a few months later it is stolen. OK I get a new phone. So because I have 2 claims in a 12 mo time they cancel my insurance. Now I have none.

    • Samantha Driver

      No need to call names, Shannon!

  • NoGUnz.ever

    We’ve never owned a stupid cell phone and never will. Life is SO much easier and less expensive that way.
    The good ole’ land line at the house works just fine and we can wait to call Aunt Martha to tell her about the kids’ t-ball practice and those other “important” things until we get home!
    One recent survey found that 97% of people with cell phones would be better off without them. Good riddance to cell phones!

    • Sanjosemike

      NOGunz, I get your point. However, it is very helpful to have cell phones in case of emergencies. Especially for elderly people. Some people sign up for “home alert” devices they wear around their neck. However, they don’t work when you are outside, say in the back-yard.

      That said, even cheap cell phones will work during an emergency. You are probably young and don’t have “experience” with aged people.


  • Garima Jhawar

    This is not a negative article, but definitely a different perspective towards mobile insurance. Some find it useful and some don’t. At last, it is only about the monetary benefit which you can enjoy if you happen to lose your phone due to any sort of accidental damage, whether physical or liquid.

    But I would say something is better than nothing. If you have incurred a huge cost on buying your expensive phone, then the mobile insurance will let you relax for any sort of damage to your phone. As you know, you will be paid for it.

    I got my phone insured from GizmoHelp and I am very much satisfied with the services they offer. Anyhow, if you are in India, you must look at their plans at their website.

  • Sanjosemike

    State Farm does NOT offer cell phone insurance, even for people with existing personal article insurance. They are covered under “home-owner’s insurance” with usually a high deductible. So the above article…at least for State Farm is inaccurate.

    That said, I doubt that ANY personal article insurance company, connected with home-owner’s insurance, will protect it.