8 Reasons to Ditch Your Cell Phone Insurance, Unless You’re A REAL Klutz

Seriously. Have you read the policy? It has more loopholes than a tax bill before Congress, so unless you’re a really clumsy person, cell phone insurance is a waste of your money in my opinion. Specialty insurance rarely works out to the buyer’s advantage and here’s why:

1. The fine print reminds me of a piece of Swiss cheese. It is full of exemptions to protect the issuer and the cell phone company, not the consumer. Most limit the number of claims you can file during any 12 month period and even then, you’ll have to jump through spinning hoops to collect. Certain models are exempted, as are types of damage covered. Some cover water damage, some do not. Some cover dropping, others do not. Scratch the screen? You’re outta luck.

2. There is usually a significant deductible you have to pay first. Not only does the policy cost you $5 to $10 bucks per month, but you’ll then have to pay a $50 to $100 deductible to even collect. How much did your phone originally cost?

3. Even if you DO file a successful claim, you may not get the phone you want. Most policies only cover “replacement of a comparable phone,” not your exact model. So you spend $50 on a deductible and then 12 months at $5/month and you don’t even get the one you really want? No thanks.

4. You may not even get a new phone. Hope you like “refurbished” phones because that is likely what you’ll get. A friend of mine recently had a phone replaced and the new one worked but sounded like a tackle box when shaken lightly. She also found that the quality of the pictures it took was pathetic.

5. You’ll pay more in insurance than your phone is worth. Most cellular providers give away very good new phones when you renew your contract, so why would you want to insure something that you received for free? Put that money into a savings account, then if you drop it and need another one, and if your provider won’t give you one for free with a contract extension, pull the money out of that account, add your deductible to it and buy a new one.

6. Homeowner’s or car insurance may cover you anyway. No sense in paying twice so check with your agent or *gasp* read your homeowner’s and auto insurance policies to see what IS covered.

7. The phone you’re given may not fit your old phone accessories. This happened to me recently. I keep chargers all over the place: at home, in my laptop bag, at the office, in my car, in my wife’s car. My new phone was the same brand and appeared to be the same model, but used a different charger. Ugh!

8. You may already be covered by the manufacturer’s warranty. The policy you’re considering may be redundant with the manufacturer’s warranty, which often offers the replacement of a malfunctioning phone. Also, check with your cell phone retailer to see if they have a replacement policy that isn’t contingent on insurance.

Chances are, you will never file a claim on your cell phone policy. Most people don’t, that’s why cell phone insurance is such a cash cow for issuers. so the next time you’re pressured to add insurance to your cell phone account, resolve instead to put that $5 or $10 into your savings account and become self insured.