Economic breakthrough: Cellphone insurance is a ripoff

Those of us who started our careers in the electronics biz as salesbots for one of the big box retailers are all-too-famliar with what's known industry-wide as "the cheese." For the uninitiated, the cheese is that worthless warranty (or guarantee or protection plan or however else they can avoid saying "insurance") which they try to sneakily tack-on to your purchase at the very end of a sale. All salespeople know that the warranty is a joke (the markup is usually 50% and up), and hang around the breakroom every day in their off-the-rack suits giddily counting and comparing their cheese. It should come as no surprise to anyone, then, that British industry group BIBA has declared cellphone insurance to be mostly "a waste of money." The obvious exception here is expensive, high-end smartphones (or costly showpieces like the Nokia 7280), but the average phone buyer is better off self-insuring, even more so when the carrier does not offer lost-or-stolen insurance. So we want to know: what have been your experiences with insuring or not insuring your mobile?

[Photo via Peet]

[Jeff @ Dec 19th 2005 2:37AM]

I pay $60 a year to Asurion for insurance, and when I dropped my Qualcomm smartphone 40 feet and destroyed it, it cost me $50 to replace it. Not bad.

[seb @ Dec 19th 2005 2:37AM]

my insurance through cellphone companies weren't through the cellphone company at all.. it was through a third-party called LOCK-LINE, or something. it was actually great. they took the phone back for just about any reason (which i've tested, trust me), and had one 2nd day aired to you with the return label for the old phone. if you're smart enough to keep your numbers on your sim card (rather than phone memory), issues are slim to none. you might get a refurb, but hey, $5 a month for a few months is a lot better than $300 out of your pocket all at once.

[Treo 650 Owner @ Dec 19th 2005 2:37AM]

Normally I would say it's a rip-off too, but after my son dropped my month-old Treo 650 a while back and cracked the screen, I decided to insure it for $3.99 a month. They called me on the phone to verify it worked and I had it, and they were happy. A couple weeks later I called it in as broken, and they happily replaced it with a new one.

[Justin @ Dec 19th 2005 2:37AM]

i bought it from Sprint for a Treo 600 and used it 3 times to replace the Treo:

1. washed the treo in my ski jacket. doh!
2. dropped the treo from my lap getting out of the car.
3. replacement (refurbished) treo was a piece of crap and stopped working by itself this time.

at $3/month over 16 months, I'd say it was worth it. But the treo 600 is a costly, delicate exception.

[Jason @ Dec 19th 2005 2:37AM]

what's funny is the fact that most cell phone companies wont even let you put expensive phones on insurance (like any smartphone, a pda phone, or even the razr), so you're assed out $500+ if anything happens to it.

[Jaxim @ Dec 19th 2005 2:37AM]

If you lose/break your phone and you can stand to be without a phone for a bit, then the insurance is a good thing to get at the time of the phone loss. After a couple of weeks have gone by, you can report the phone missing and get a replacement, and then after a month or so you can cancel the insurance.

You still have to pay the deductible (about $50), but it's a better alternative than resigning a 1-2 year contract in order to buy the phone cheaply, and a cheaper alternative than buying the phone wholesale.

Note: Of course I say this not from experience, but from what I've heard other people doing.
;-)

[diulei @ Dec 19th 2005 2:37AM]

It's a waste for most people, except those who use it as a cheap way to get a second (or third) cell phone.

[Julien @ Dec 19th 2005 2:37AM]

Yes, it may work with Treos, but I can't see someone paying 3.99$ a month for a RAZR. I paid 50EUR for my RAZR, if I put a year of insurance fees on it it would double the prize.

So, I agree: expensive smartphones, yes - normal cellphones, no

[Ian @ Dec 19th 2005 2:37AM]

I had the LCD on a SprintPCS Treo 650 crack. I tried to go to the store to get a replacement. Unfortunately, they force you to deal with this quiet dreadful company called "Lockline."

So I called lockline, let them know the situation. They charged me a $50 deductible for phone replacement and sent me out a phone. This was a thursday before labor day weekend. Wednesday the next week the phone arrives. Unfortunately, this phone is broken worse than my phone!

While the LCD on my phone was broken at least I could use the phone since I knew my way around using key presses. But on this phone the microphone and speaker were broken. So I call Lockline and beg them to expediate me a new phone. They don't do expedition. At all. They also won't guarantee you a new phone. So fine. So now its Tuesday nearly two weeks after my phone broke and another package arrives.

Lo and behold! It's some $25 LG Flip-phone. The inside packaging is addressed to someone else. They put the wrong label on the wrong box. At this point, I call lockline and again push very hard for some sort of expediation. They refuse. I'm starting to get agravated enough to switch carriers.

So I call SprintPCS customer solutions and explain my problem. They find a store (the very store I tried to get to replace it to begin with) that has a refurb replacement phone. They exchange it with my phone with the broken LCD screen. SprintPCS Customer solutions saves the day.

The moral of the story: when the insurance company gets completely out of line, push your case with the carrier.

Ian

[murph @ Dec 19th 2005 2:37AM]

i have a friend who gets a little too drunk, a little too often. he broke/lost 6 phones on a insurance contract. he received a letter after #6 telling him they were dropping him from the insurance.

[Mike @ Dec 19th 2005 2:37AM]

I hate when they ask u to get the damn insurence!

[Finished.Law.School @ Dec 19th 2005 2:37AM]

Some credit cards include insurance for cell phones. Some cell phones can also be replaced under warranty (depending on the problem) which may negate the need for insurance in some cases (this is assuming that people are not aware of the factory warranty when filing their claim).

[John L @ Dec 19th 2005 2:37AM]

Cingular offers insurance, but it doesn't cover any PDA phones - but they're happy to bill $3.99/mo. for the insurance without telling you that it doesn't cover your Treo.

[Kevin Hanson @ Dec 19th 2005 2:37AM]

I like nice phones + the fact that I get drunk and break them = a damn good use of insurance thus far for me.

[aaron @ Dec 19th 2005 2:37AM]

i had sprint for the past 2 years and i bought insurance on the phone. Good thing was that i did use my inssurance on the phone quite a bit i lost or broke a total of 8 phones in that period of time and Sprint did cover it with a 35 copay for each phone and a 5 a month added to my bill total costs of phones around 1600.00 and i only had the sayno 8100 and 8200 but would have costed me 300 each time i lost or broke. so i think insurance is a must or get stuck paying for full price

[Nanci @ Dec 19th 2005 2:37AM]

We have had insurance on our phones for several years and have not yet spent more than we have gotten back. Between lost, stolen and broken phones, I can't figure out why they still insure us!

[Chris Lee @ Dec 19th 2005 2:37AM]

Depends where you get your insurance, I insure my 6600 (replacement is $800cdn) through my home insurance, it cost me $20/y and has a $100cdn deductible. well worth it imho.

[Lex @ Dec 19th 2005 2:37AM]

Insurance on lower end cell phones just isn't worth it. I definitely get it on TVs/car audio/etc. mainly because I will milk the policy right as it's about to expire. Working at Circuit City (or any of the other retailers), you learn the upside of those warranties.

[Jon Wolf @ Dec 19th 2005 2:37AM]

Cingular refuses to offer me insurance on my RAZR. Granted, I got it while it was cheap, but I am almost 18 months from when I get my next 'discounted' phone. I tend to be hard on my gadgets, phones especially. I would hate to have to come out of pocket for a new one. Insurance for clumsy people can be a boon.

[Paul @ Dec 19th 2005 2:37AM]

I think insurance for cell phones is a waste of money. When you buy a phone it has a manufacture warranty which should be good enough for at least a year. After that if your gonna be paying $5 a month you might as well start your own insurance pool and put away $5 a month to get it repaired in case it breaks after that year or to replace it. Otherwise if you are just an idiot or treat your cell phone like a hunk of junk then you might benefit from the insurance.

[Jon Wolf @ Dec 19th 2005 2:37AM]

Cingular refuses to offer me insurance on my RAZR. Granted, I got it while it was cheap, but I am almost 18 months from when I get my next 'discounted' phone. I tend to be hard on my gadgets, phones especially. I would hate to have to come out of pocket for a new one. Insurance for clumsy people can be a boon.

[Za @ Dec 19th 2005 2:37AM]

+1 on Lex

[FF29 @ Dec 19th 2005 2:37AM]

I dont regret perchaseing my cell phone insurence. I purchased it on my last phone because i have a history of messing up my cell phones. I have gotten my current phone replaced two times. I am not a clumsy person i just dont have good luck with my phones. The first time my current model broke i fell off of my bike and landed on it. The second time the outer screen just kinda shatter do to the pens that i had in the same pocket. It is not a good phone but the insurence has paid for it self. In most cases i would tell people that it was a waste of money but in mine and with people who are like me i would say that it is almost necissary.

[Steve @ Dec 19th 2005 2:37AM]

I never get it. Every time I break / lose my phone I threaten to leave. They are usually too eager to not lose your business. Even if you are under contract, you cannot be bound when you aren't getting your half of the contract... i.e. cellular service. If are super loyal to your company and they call your bluff, just call back for another agent or ask for the manager. Remember it costs these companies (cell/cable/satellite) a ton of money to get new customers vs retaining which is profit.

[Jeremy @ Dec 19th 2005 2:37AM]

I agree that the insurance is generally a rip-off. If I average breaking my phone after 12 months of and insurance costs $4/month ($48) plus a $50 deductible then I just paid $98 for a (usually) _refurbished_ phone. For a mere $30 more, I could buy a brand new Nokia candy bar phone if my phone breaks. Otherwise, that's $98 in my pocket to apply to a new phone.

I don't know if Cingular sells insurance for BlackBerry devices. I know AT&T didn't but in my experience they're built like tanks and even though they cost $350 with a contract, they can take a lot of abuse and keep working even if the case gets a little scratched up.

[Dave @ Dec 19th 2005 2:37AM]

I never purchased the insurance for my less expensive cell phones but when I purchased an XV6600 Pocket PC phone I sure did. It was the best $5.99 a month I could have spent. After only two months of use my XV6600's screen cracked.
Even with a $50.00 deductable the insurance was worth every penny.

[jnasato @ Dec 19th 2005 2:37AM]

I figure insurance is just one less scam-store coffee a month... I've never used it, though.

[uber0 @ Dec 19th 2005 2:37AM]

I completely agree with what the first guy said at the end. I dropped my Panasonic X800 in the water (at a beach) and there was no way they'd replace it for me.

[MILLER @ Dec 19th 2005 2:37AM]

Most people don't realize how expensive phones are to replace, not to get new with a 2 year contract. I bought my RAZR at bestbuy, and the rep informed what you all know, cingular's insurance does not cover the RAZR so i spent the $30 on the performance plan, pretty good deal, yeah it doesnt cover lost or stolen but bring on everything else

[Mike @ Dec 19th 2005 2:37AM]

This one goes out to all my friends working at BBY and Circuit City...

A year ago, before BBY wised up, their cell phone warranty was not a product SERVICE plan, but a product REPLACEMENT plan. I started out by buying a $300 Seimens slider (you know, that cute little egg shaped phone) and a PRP - with my employee discount ($16.99). I got a $300 rebate from AT&T for the phone. A few months later, I decided the buttons weren't working as they had the first day I purchased the phone. I took the phone back and they replaced it with the Motorola V600. Very solid phone might I add. About six months passed and I decided that I had the need for a smartphone. So what to do? I got myself a #6-torx wrench and got down to the V600's guts. I made a teeny slit in the ribbon that connects the LCD to the pc board inside with a sharp utility knife. Next day I take the phone back to the store with my PRP and they give me the ill fated Mpx220 Smartphone. I did get the newer version, but damn did that phone just freaking suck. Before I knew that though, I took the phone home and used it for about a month. I then decided I hated it, and sold it on e-bay for $330.

In the end, I paid $16.99 for a service plan, which made me well versed on three different phones, and $313 dollars in my pocket. The only advice that I have is the fact that cell phones sell for a lot of money. Know what you're getting, buy a service plan for it, once you hate it or desperately need money, sell it on ebay, and make yourself a large sum of pocket change!

[Kenny @ Dec 19th 2005 2:37AM]

Cell insurance has saved me once. I decided my phone was too hot so I took it into the pool with me. It didn't like that.

[joe091 @ Dec 19th 2005 2:37AM]

In case anyone is wondering, here is Cingular's Insurance policy. They use a 3rd party company (Lockline) and they don't cover smartphones or blackberries. They didn't used to cover the Razr but they do now, just so you know Jon Wolf.

[Mark Strong @ Dec 19th 2005 2:37AM]

It worked for me, especially with two teenagers until the ins co. black-balled us. House didn't win this time!

[Mykarol @ Dec 19th 2005 2:37AM]

Insurance is never a joke....I spent over $1000 replacing fairly high end phones because I said no way to the $5 more a month cell insurance. I finally got it and now my cellphone has been repaired for free when broken. After going through 5 phones in less than 1.5 years, I would have had much better luck getting insurance in the first place. I have terrible luck with cellphones.

I used to work at a store where insurance on high end electronics were sold. The warranteies did exactly what they intended, which is why the prices were that high.

It really depends on the company.

[Jrat @ Dec 19th 2005 2:37AM]

I got my RAZR from T-mobile for $175 and they offered insurance at $6 a month with a $110 deductable.

[frank @ Dec 19th 2005 2:37AM]

Like I always say, there just aren't enough sharp edges in the world keeping the dumb people from procreating. If the populace at large learns the secret about cell phone insurance, there will be one less.

[Verizon user @ Dec 19th 2005 2:37AM]

I've used Verizon's cell phone insurance -- it only provides refurbished phones of the same make/model of your phone, where sometimes they don't even erase the prior phone numbers dialed and phone book.

The two times I've used it, I hated the refurbished phones because something was wrong with the refurbs and had to *buy* a new phone rather than to deal with a lemon. (I've even returned the refurb for another refurb and it was another lemon.)

I would say if you have a low-end phone, you may as well buy another low-end phone rather than deal with the refurbished phone.

If you have a high-end phone, it may be worth keeping the insurance, though.

[Russ @ Dec 19th 2005 2:37AM]

I recently changed carriers. Was with SprintPCS for over seven years and during that time had four different under $100 Samsung phones. Never insured them, never lost them, never damaged them. All was well.

Then in July I switched to Cingular and purchased a Motorola RAZR V3 which I really didn't want (I wanted something unavailable at the time (and still: the HP Messenger, HTC Universal or some other Windows-Mobile-5-based handheld that would be a great email device and overall connected PDA.

Of course I didn't buy the insurance and three weeks later I lost my phone. Cost me $325 to replace the phone I didn't really want. And within 30 hours it fell out of my pocket into a toilet. Another $325. Six days later that one fell out of my pocket in a taxi. Another $325. Now I carry insurance.

[anonymous @ Dec 19th 2005 2:37AM]

I worked for lockline for a short time as a software developer. I felt dirty at the end of each day.

[taylor moore @ Dec 19th 2005 2:37AM]

warranty worked for me on my treo 600, they sent me a new treo 650 for free when i called in about my 600 not functioning right, couldn't have been easier, but this is a rare exception i'm sure. insurance saved me on another PDA once also.

[Bobby @ Dec 19th 2005 2:37AM]

Personally, due to the fact that i am an unemployed 16 year old, i don't have the financial means to afford insurance. I prefer to instead rely on sheer luck. for example, my previous phone was a samsung SCH-a670. it was a good phone and apparently extremely hard to break as i left it in my pants pocket and it went through an entire wash/dry cycle through the laundry machine and witha new battery and a few days of drying out it was completely fine! all that was wrong was a little soap residue on the front screen. The second thing about why luck is better than insurance is that the day after i got my brand spakin new VX 8100, i proceeded to plop it right into lake washington. luckily i dived in and saved it from being in the water more than 5 seconds. it is still working completely fine up to this day. but, considering both of these phones are rather expensive i really should have gotten insurance... still don't have it though :)

[James Rice @ Dec 19th 2005 2:37AM]

I have always had phone insurance thru verizon... mainly because I've always had the more expensive models...
I only used it once, back in the day on a digital starTAC that got wet :)

[James Rice @ Dec 19th 2005 2:37AM]

Someone else said Verizons insurance only provides refurb phones...
That might be the case these days, in which case i may stop my insurance... but that didnt used to be the case.
When I used the insurance, I got a brand new replacement startac.
I had the startac with the slim battery :) that sh*t was hot back then

[Nickster @ Dec 19th 2005 2:37AM]

The insurance plan from verizon has saved me twice , verizon has a two claims per year per phone thing. The first time I made a claim I had lost the phone, they only wanted a police report. Second time I dropped the phone and it cracked the screen and spilit the keyboard apart.

Verizons insurance also doesn't cover water damage, my brother washed his phone and he thought the phone was broken. I took it and replaced the battery and the phone works great.

[Joel @ Dec 19th 2005 2:37AM]

I originally purchased a Motorola RAZR v3 BLCK (a $220 + 2 yr subscription investment) and I dropped it in a canal.

It was kind of bittersweet for me, I called the insurance place for my phone, lockline, and they told me that they would replace it for a $50 deductible. But they couldn't garauntee that I would get a black RAZR back. So my replacement phone is sent to me and it's a freaking silver RAZR. I was a bit upset, but, at least, I got a RAZR back with out having to pay $400.

I think the insurance is a good idea if you make high-end investments like this. I would have definitely missed my RAZR, I'm happy I have one at all.

[Marc Wilczynski @ Dec 19th 2005 2:37AM]

I personally work selling phones and I do push extended-warrenties on all cell phone purchases.
Not on all mind you, there are cases where ppl just don't want to pay anything in store and I don't even bother.
But mind you, I have had several customers who bought and several who have not bought the warrenties come back to the store with their broken phones.
Guess which one leaves the store happy...

Then again, most of the phones I sell are pretty expensive...

[Marc Wilczynski @ Dec 19th 2005 2:37AM]

@39
I'm not to sure with verizon's policies, but I know that in my store we dish out a brand spankin new phone for the customer.
I've even had a customer snap their phone in two on purpose just cuz their current phone had some scratches.

The only refurbs we offer is those available through our lost or stolen program.

[Ethan Fineout @ Dec 19th 2005 2:37AM]

I broke my phone doing an antenna mod that required some shaving down of the antenna mount. Bingo-Insurance!! Worked pretty well for me.

[Hooty @ Dec 19th 2005 2:37AM]

Here in Canada, Rogers Wireless has eliminated insurance all together. Basically if you lose your phone, etc... they'll give you a refurb for next to nothing.

[Methos @ Dec 19th 2005 2:37AM]

I never buy cell phone insurance (nor insurance on any other gadget) and never had problems with any cell phone (either through mishap or faulty internals). And I keep my phones for 2-3 years. The only gadget failure I've experienced is my Pocket PC earlier this year (faulty internal), but I had the Pocket PC for 5 years so I was due for a replacement anyway.

Some accidents are unavoidable, but in general if people just took more care of their gadgets, they'd save themselves a whole lot of money.