How Smart is it to Insure Your Smartphone?

According to a recent survey by Pew Research, approximately 45% of adults own a smartphone in the US.  Replacing a broken smartphone, or purchasing insurance through the phone carrier to cover a loss, can be very costly.

Most phone purchases come with a contract of some sort; typically it requires a year or two commitment. With this contract, often a new phone is free, or comes with a substantial discount off the normal retail price.  If you were to purchase the phone brand new, without a contract, you can be looking upwards of $500.   Meaning replacing a lost or damaged phone is a much larger one-off expense than the original purchase.

Cell phone carriers often offer a monthly insurance fee in case the phone is lost, broken or stolen.  Along with this monthly fee there is usually a deductible involved, sometimes as much as $300.  Meanwhile, a cell phone is considered personal property under your homeowners’ insurance, but most homeowners’ deductibles are more than the cost to purchase a new phone. Since the homeowners’ policy is designed to cover a major/catastrophic loss, average homeowners’ deductible is $1,000.

Some insurance carriers offer to schedule your phone onto your policy (with a $0 deductible) just as you would a piece of jewelry, but you have to be aware that a claim for a lost/stolen/broken phone will be considered like any other homeowners’ type of claim. Meaning it could affect your premium, especially if you make several claims.

Ultimately, you want to ask yourself what your risk tolerance is.  Can you absorb a $500 smartphone loss?  Can you afford the monthly fees/deductibles associated with the cell phone carrier coverage?  Do you want to risk making a claim to your homeowners’ policy and have the claim adversely affect your premiums?

The process of purchasing insurance is not always a simplified formula.  The key is to consider your level of comfort and make a selection that’s right for you.

If you have insurance questions, contact an expert here.

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