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Cellphone insurance: Is it worth it?

When you buy a new cell phone, most companies take the opportunity to offer you insurance that’s supposed to protect you in case it breaks. But does it really help?

A couple of Christmases ago, I splurged and bought my boyfriend a smartphone. Because it seemed like a good idea at the time, I also paid for an insurance plan at about $10 a month.

Several accident-free weeks went by, and I decided to cancel the insurance. Our carrier sent a courtesy text to inform of the cancellation. When my boyfriend pulled out his phone to check the very text informing him that his phone was no longer insured, the phone slipped, fell to the ground and the screen shattered.

Know what would’ve been awesome to have at that moment? Cellphone insurance.

Like all insurance, cellphone insurance is a big waste — until you actually need it, and then it’s awesome. On the other hand, my experience was an unlikely fluke, and even if we’d had it when the phone broke, we still would’ve had to pay a pricey deductible. My own ironic anecdote aside, is cellphone insurance worth it?

Most experts say no.

“Monthly premiums of $5 to $7 and deductibles of $25 for lesser-value phones to $199 for smartphones can add up,” says Consumer Reports spokesman James McQueen. “If you file a claim after 18 months, you’ll have paid a total of $115 to $325.”

At that time, not only are you paying close to the original price of the phone, you’re also paying for what’s now an outdated version. This begs the question: what’s the point?

There’s also the fine print. Many contracts allow the insurer to send a “working replacement.” Yes, that means your replacement phone could very well be used.

“The insurer might replace your phone with a refurbished model,” says McQueen.

Asurion, the largest cellphone insurer, says that while they may send refurbished phones of the same model, they don’t send older model replacements. ┬áBut there is a limit to how many times a year an insured phone can be replaced: twice.

“In a 2009 survey we found that only one in five readers who bought a new phone in the previous two years did so because the old one was lost, stolen, or broken,” says McQueen.

In lieu of insurance, he advises:

“Keep your old phone after you upgrade so that you can reactivate it if necessary.”

Do you have cellphone insurance? Do you think it’s worth it?

(Photo: Daniel Oines)