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Smash Your Phone? Check Cell Phone Insurance Protection Plan

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Smashed iPhoneAbout a month ago, my lovely wife’s cell phone started experiencing microphone problems. I’d call her and she could hear me talk but I couldn’t hear her. A quick trip to the AT&T store revealed that her phone’s microphone was busted, a fix that should’ve been a quick swap out and covered under warranty. Unfortunately, it appears that the cell phone had experienced “water damage,” as indicated by a red dot in the phone. The phone has never experienced water “damage,” maybe a couple drops in the rain, but apparently that was enough (other potential culprits, steam from a shower… but who showers with a phone?)

As fate would have it, I received a letter from Citi that explained how our Citi mtvU card was going to be replaced with a Citi Forward card. One of the perks of the Citi Forward card was insurance protection for a cell phone, as long as you used the card to pay the cell phone bill. The coverage was up to $250 with a $50 deductible, easily matching most other warranty programs. Unfortunately for us, she was part of her parent’s family plan and they directly paid the bill, while she reimbursed them with a check.

I did more research and learned there are three ways to get cell phone “insurance” protection with a credit card (unfortunately, many require that you buy the phone with that card, so they didn’t apply in our case):

Purchase Protection

American Express offers a purchase protection policy on all purchases you make with a covered card. These programs typically protect you for a number of days after purchase, American Express covers you for 90 days, and have dollar limits, though they are usually higher than a cell phone’s cost. If you happen to break the phone, by dropping it on the way out of the store, you can submit a claim and the credit card company will often reimburse you, after a deductible. The downside of this insurance is its small window of protection after purchase (and not many cards offer it). What this will protect you from is if you do something clumsy, like drop an iPad on the way out of the store. It won’t be much use for protecting your cell phone unless the manufacturing was particularly shoddy.

Warranty Extensions

Warranty extension programs are more popular and more useful, since they typically double the manufacturer’s warranty up to an additional year. If your handset came with a one year warranty, you now have a two year warranty if you buy it with a card with this protection. If it came with a six month warranty, you now have a total of one full year of protection. This also means that you can decline extended warranties when the cashier asks you if you want to get some extra protection. The warranty extension from the credit card applies to the manufacturer’s warranty, not to any after market warranties. So if you were to buy that extended warranty, you’d be buying redundant coverage.

Cell Phone Protection

Much like the Citi Forward card, many banks and credit cards will have cell phone protection plans that work similarly to the carrier’s plan. Cell phone carriers often sell insurance policies that cost around $15 a month to insure your phone up to a certain dollar amount with a deductible. Cell Phone Protection plans offered by bank and credit cards are similar, except they don’t charge you a fee. For example, 5/3 Bank offers a protection plan of up to $200 per claim with a maximum of two claims per 12 months and a $50 deductible per claim. The numbers may be different, in terms of limit and deductible, but the basic premise is the same – all you have to do is pay the bill with your 5/3 bank card. You don’t have to buy the phone with the card. Check to see if your credit card offers this.

While it didn’t work out for her, check to see if your credit cards offer similar protections and be sure to use them to pay your bill. It might be a great way to save a lot of cash when you smash that new fancy iPhone.

(Photo: mager)

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2 Responses to “Smash Your Phone? Check Cell Phone Insurance Protection Plan”

  1. zapeta says:

    I didn’t realize some credit cards have that feature – and I have the Citi Forward card. I’m going to see if I have the same coverage, and if I do I can drop the insurance I pay to AT&T.

  2. ptkdude says:

    Instead of paying for the cell phone insurance, I send $15 per paycheck to a savings account designated for replacement cell phones. In almost 20 years of cell phone ownership, I’d only ever used the insurance once, so insurance was a waste of money in my case.

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