Should You Get Insurance for Your New iPhone 12?

In today’s world, your iPhone or smartphone is almost like another limb attached to your body. Every day, everywhere you go, your iPhone is with you. It’s not only for social media usage, but also for work, emails, games, GPS, messaging…you name it.

The more useful our iPhones have become, the more expensive they have become too. See Android Authority’s write-up on why the price of smartphones have DOUBLED over the past 5 years. It’s not as simple as losing your phone and buying a new one the next day or cracking your screen and getting it fixed on the cheap. The ecosystem has morphed into manufacturers and telecom services binding you with expensive contracts and expensive “pay-as-you-go” options.

We’ve all seen breaks, falls, hardware malfunctions, water damage, and so on, happen to our own iPhones as well as our friends’ and families’. So the almost obvious answer is to simply purchase iPhone insurance for as low as $7.00 a month right? Well, the answer depends on a lot of things, including what phone you have and what price you paid for your device.

Why You Shouldn’t Purchase Insurance

The biggest cost for a lot of these insurers are false claims. Many people make a claim that their iPhone was “stolen” or was cracked after they purchased the insurance…which is never actually the case. While you may think you can easily outsmart these insurers, think again.

The monthly cost is only the cost to have the OPTION to get your device repaired or replaced. There are oftentimes very high deductibles on these replacements and repairs. Just can look at some of the deductibles you can expect to pay if you have the best insurers in the business with a simple Google search.

You can usually expect to pay anywhere from $50 to $200 for a deductible. Not only that, but many times if you file a claim immediately, these insurers ask a ton of very detailed questions. They know the odds of you purchasing iPhone insurance and the phone breaking the very next day are very slim. It’s a rare thing to happen.

Not all insurers allow you to purchase at any time. Many plans want you to sign up within a week or two of purchasing the phone; otherwise they won’t let you buy their insurance. This is one very effective way these companies prevent fraudulent claims from occurring.

Another factor to keep in mind is the fact that you will either be getting a refurbished phone as a replacement or they will fix your iPhone with different parts that may not be OEM. A refurbished iPhone comes with a new battery and new outer shell. That being said, they are still used phones that likely had some previous problems. Companies like Apple and other third party companies take old and used phones, spruce them up, and sell them for just under what a new phone would cost.

Back of the Envelope Math

Let’s say you end up purchasing that insurance for $8.00 a month. Let’s also assume you bought an older model iPhone for $600. After two years, you will be paying $192 just for the subscription!!! That’s hard earned dollars right out of your pocket without you having received anything. On top of that, you will likely need to pay another $150 to $200 deductible to replace or repair your iPhone.

So, with this scenario, you could be looking at upwards of $400+ to protect your iPhone from damages or get a replacement. Now, even though that is below the cost of your iPhone that was purchased at $600, it doesn’t mean it’s still worth it. The odds of you cracking your screen or losing your iPhone is not 1 to 1. Meaning there’s also a high chance that nothing bad will happen to your device, yet you would still be paying for the insurance.

Alternative Options to Cell-Phone Insurance

Purchasing your new iPhone with specific credit cards that extend your warranty

Check out Nerd Wallet’s breakdown of what different warranty policies are in-place under American Express, MasterCard, and Visa. The only major company that does not offer this sort of option is Discover. Nerd Wallet explains the exact documents and reasons make you eligible as well.

Oftentimes, companies like Amex like to see a history of payments towards the cell-phone provider if you are paying in installments or evidence of receipts and copies of the original manufacturer’s warranty. Always keep in mind that if you choose to go down this route – the more proof and evidence you have, the better off you’ll be!

Create an emergency fund to replace your tech devices

Instead of paying these companies a monthly premium, you can always just pay yourself! If you save the money and fortunately don’t break or lose your iPhone, you could build up a nice reserve of cash over time. You can either dip into this cash if something does end up happening to your iPhone or maybe you get lucky and purchase a brand new phone when time comes.

Fix the phone yourself

If you are the type of person who is good at watching videos and implementing them, this might be the option for you. There’s a ton of information online about the tools required and the process behind replacing a battery or a screen.

You should always leave this up to professional technicians though, even if DIY may prove to be the most cost-effective method!

Shop around repair shops

It may be helpful if you call up some of your local repair shops and compare prices they are pitching against stores like Best Buy. Sometimes these bigger companies even provide a price match. A lot of people overlook local repair shops due to lack of trust, confidence or lack of transparency with pricing.

Don’t hesitate to walk in or call NYC Mobile Device Doctors to get a better idea of how much you should be paying to get a screen fixed, for example. Many of the larger companies like Apple will charge you an arm and a leg, especially if you don’t have warranty in place!