What is Mobile Phone Insurance?

With mobile phones costing anywhere from several hundred to well over a thousand dollars, often entailing a monthly commitment, phone insurance can be a great help for your peace of mind.

How Does Phone Insurance Work?

Phone insurance generally pays for a device replacement or for covered device repairs, typically after charging you a deductible. Depending on the type of coverage, this may mean you’ll be reimbursed within a few business days for your repair costs, or the insurer will cover the costs of repair or replacement directly. Usually, in this case, if you’re replacing the device, you’ll have to file a claim online or over the phone, and you can expect to receive a replacement in one to three business days. Some smartphone insurance plans offer a same-day replacement.

When replacing a damaged, inoperable device, many insurers require you to send back the old phone. Phone manufacturers, service providers, credit card companies, and 3rd-party insurers all offer some form of phone protection plans and device insurance. Here’s an overview of the typical features of each, and a brief guide to help you decide what kind of gadget insurance works best for you.

Cell Phone Insurance Plan Comparisons

To help you decide on the best mobile phone coverage, we’ve outlined the basic types of cell phone insurance and the key differences among them. For homeowners and renters, have a look at the types of property insurance plans.

Manufacturer Smartphone Insurance Plans

Most smartphone manufacturers offer a warranty that covers defects. These typically include tech support and may or may not cover accidental damage. For an additional fee, both Apple and Samsung offer extended warranty coverage. Apple offers AppleCare+ for the iPhone, extending coverage for accidental damage up to two years. Samsung offers Premium Care for a monthly fee, which extends the manufacturer warranty for as long as you pay the monthly fee. Unlike phone insurance policies, however, manufacturer warranties do not cover loss or theft.

AppleCare+

Cost: One-time fee of $149 to 199 depending on the device.

Covered: Accidental damage, manufacturer defects, screen damage. Deductibles range from $29 to $99 for repairs. Up to two incidents of damage.

Not covered: Loss or theft.

Samsung Premium Care

Cost: About $12 per month

Covered: Accidental damage including drops, spills, and cracked screen. $99 deductible for repairs; up to three replacements per year.

Not covered: Loss or theft

Cell-Phone Carrier Smartphone Insurance Plans

Most cell-phone plan carriers also offer device insurance, either directly or via a contracted underwriter such as Asurion. Unlike manufacturer policies, these insurance plans typically cover loss and theft. In general, these policies can be extended indefinitely as long as you pay the monthly fee.

Cost: About $10 to $20 per month, depending on carrier and device

Covered: Loss, theft, technical issues, and accidental damage. Deductibles range from $99 to $200 depending on the device and the insurer. When replacing a damaged phone, users are typically required to mail in the old, nonfunctional device.

Caveats: Most carriers charge an additional fee for a phone insurance policy that includes tech support. Verizon’s Asurion plan allows up to three replacements per year; most other carrier policies are similar.

Third-Party Phone & Device Insurance

Many insurance companies will sell phone and device insurance directly to consumers. These policies vary widely, but in general, they offer different tiers of coverage, with some basic plans, usually starting under $100 per year, only covering phone malfunctions and accidental damage, not theft or loss. Broader coverage is usually available for an upgrade.

Some home and auto insurers also provide phone and device coverage. Many offer a discount if you’re already using them for homeowners’ or renters’ insurance. Many existing homeowners’ and rental insurance policies will cover phone theft, provided the theft occurred on the insured property. However, these policies generally don’t cover accidental loss or damage to a mobile device.

Homeowners’ and renters’ insurance deductibles vary depending on the policy but are typically higher than those of basic cell phone coverage from carriers and 3rd party insurers. 

Retail Coverage

Some retailers such as BestBuy with its GeekSquad plans offer their own extended warranties that may cover phone repair and physical damages as well as device malfunctions caused by manufacturer defects. Like AppleCare services, these typically don’t cover smartphone theft or accidental loss.

Device Insurance Through Credit Card and Finance Companies

If you pay for your mobile phone and the monthly bill for your cell plan using a credit card, you may be able to get protection for your mobile device through the credit card company. This lesser-known benefit tends to act more like carrier insurance policies than manufacturer warranties, typically including coverage for theft and accidental damage for a limited period of time, ranging from around 90 days to one year.

Credit Cards with Phone Coverage

American Express, Mastercard, Chase, Visa, and Wells Fargo, among others, offer some degree of purchase protection for cell phones paid for on one of their cards. A typical breakdown of this coverage would include a $25-100 deductible for lost or damaged phone replacement, payouts of up to $600 per claim, and an annual limit of around $1200.

Choosing the built-in protections that come with your credit card may save money compared to purchasing separate phone insurance, but there are some caveats that require careful reading of the fine print. Often, the limit per claim may be less than the cost of replacing your phone, leaving you with a bill that could still be a few hundred dollars. They may also require documentation that you’ve paid the previous month’s phone bill on the card, or require you to file a claim with any other insurers first. Some such as the Citi Prestige Card cover theft but not accidental loss. Some cover damage but not “cosmetic” damage.

What Coverage Is Best for You?

Deciding which type of phone insurance plan works for you will depend on several factors including how often you tend to replace or repair your phone, how much you use your phone, how often you tend to upgrade, and your comfort level with financial risk.

If you travel often, or if theft and phone loss are something you’ve experienced, then the manufacturer’s extended warranty plans may not be sufficient. You might want to add peace of mind with a mobile phone insurance policy from your cell phone plan carrier, your home or auto insurance providers, or a third party. If you need such features as coverage for water damage, coverage for more than one mobile device, or same-day device replacement, you’re generally better off with a mobile insurance policy from your wireless carrier or a third-party insurer, rather than manufacturer or retail device coverage.

If, on the other hand, you can add up the total cost of phone replacements and repairs over the past year, and find it’s significantly less than the cost of a typical phone insurance policy, and if the prospect of having to replace your phone out of pocket in case of an unexpected loss doesn’t seem like the end of the world to you, you may want to save the money and stick with the manufacturer’s standard warranty.

Finally, if you use a credit card for all your cell phone billing and don’t mind navigating the fine print of the cardholder agreement, you may find that you already have some degree of mobile device protection from the credit card company.

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