Is Mobile Phone Insurance Worth it?

Thursday, March 7, 2013

Is Mobile Phone Insurance Worth it?Many insurance companies and most mobile phone networks now offer special policies for mobile phones. However, most people still believe either that the policy that covers their home contents is sufficient to cover their phones too, or that mobile phone insurance is too expensive and pays out in too few circumstances anyway.

With the smart phone market becoming ever more sophisticated, mobile phones can be very expensive. The more expensive the phone, the more appropriate it is to get some kind of insurance on it. Calculate what will cost you the most: to replace the device yourself, or to pay a monthly premium on it for about two years.

Here are some things to keep in mind when you decide whether to insure your phone:

  • Many insurance companies either automatically include it as part of your travelling home possessions, or you can pay a bit extra on your home insurance to have it covered together with your notebook, for example. This is usually substantially cheaper than insuring it separately or insuring it with your mobile phone network. It typically costs somewhere between $30 and $40 extra per year, and it covers you for theft of, or damage to, other travelling possessions as well.

  • Mobile phone insurance is typically pricey.   Mobile phone networks charge anything from $70 to $150 a year, and considering that most phones cost in the range of $400 to $700, this is probably not worth it for the cheaper phones. Ask your network provider, however, since many of them do reward loyal customers with lower insurance premiums.

  • Dedicated companies that insure only mobile phones usually charge somewhere between the amounts of your home insurance policy and your mobile phone network's coverage.

  • Mobile phone insurance often fails to pay out if phones are stolen from public places like schools and restaurants, if you don't report it inside the first 24 hours, if it is not taken from you violently, and so forth, so check your policy carefully.

  • If your phone is on a contract, you are financially responsible for the whole contract period, even if your phone is stolen halfway through. You then have three options: (A) place your sim card in an old phone, (B) buy a new phone or, (C) buy out the remainder of your contract period and get a new contract with a new phone.  This calculation is impossible to make in the abstract, because you cannot know how much of your contract period will be left when the phone is stolen. Once again, the rule of thumb is that the more expensive the phone, the more sense insurance makes.

  • The deductible on mobile phone policies is typically about $30 to $40, so keep that in mind when calculating what to do. For example, if your phone is worth $150 and the deductible will be $40, continue to shop to find a lower deductible or a very low premium.

Whatever the insurance method you choose, you should make sure you are covered for accidental damage and theft, since those are the most common causes of mobile phone claims.