This has been a rather frustrating week. First, it’s a deluge this week, so the roads are crazy here in Los Angeles (and also, we’re floating away.) Second, the hospital where my husband was scheduled for surgery screwed up the schedule and it’s been delayed. Third, as I mentioned before, the hinge on my cell phone broke. And that is what I’m going to discuss today: what a waste cell phone insurance is.

My Story of Cell Phone Insurance
I’ve been a loyal AT&T Wireless customer for several years, and I was a Cingular customer before AT&T bought them. Basically, I’ve had service with some division of their company for 13 years. In October, 2008, my husband and I bought new LG CU515 phones and agreed to a two-year contract. Now 15 months in, the hinge on my phone has cracked. When we bought our phones, they asked if we wanted insurance. I don’t usually go for these things, but we’ve had phones break before, so we said yes. One monthly insurance charge was added to our monthly bill. Now I am told that the insurance only covers my husband’s phone. We were not told the insurance would only cover one phone when we opted for it.

I called LG, but they’ve chosen not to recall the phone, despite numerous complaints on the AT&T forums and several review sites about the hinge cracking. They will apparently fix the problem free if it’s in warranty, but my phone isn’t.

I called AT&T for help, but my phone is out of warranty, they insist it’s not insured even though we thought it was, and it’s too soon for an upgrade so I can’t switch to an iPhone at the discounted price. I was told my only option is to go to one of their stores to buy a cheap GoPhone and have it added to my account. She kept saying, “We have this option for people who might be short of funds.”

I’m not short of funds, but I’m sure as hell not paying $200 for another piece of junk just to get me through the next nine months of my contract.

I explained to AT&T that my husband is scheduled for surgery and now is not a good time to be running over to the phone store. At the time of the call, his surgery was a mere 15 hours away. Yes, I can use his phone while he’s under, but I also need to be reachable on my own number. I explained this to AT&T, but only got apologies and “Sorry, a GoPhone is your only option.”

I realize that it’s not AT&T’s fault that my husband requires surgery at the same time my phone broke, but it is their fault that they sold me a phone that would not last the contracted two years. This was not a free phone – I paid $80 for it, plus the two-year contract. Without the contract, the phone would have been $200.

What the Worthless Insurance Cost Us
So far, we’ve paid $4.99 a month for 15 months. That comes to a total of $74.85. Over the term of the contract, the total cost will be $119.76. In addition, my particular model has a $50 deductible, if they were willing to replace it. Some phones have higher deductibles. Total cost to replace a phone: $169.76. I could buy a used, unlocked phone on eBay for less than that. Yes, it would be used, but it would get me through the rest of my contract. At which point, I’d have the cash to get a new phone with a new contract.

When Cell Phone Insurance Might Be Worth It
If you have a really expensive phone, one that would cost $600-$800 to replace, then yes, the insurance might be worth it. But you’re also going to pay a high deductible, and your replacement phone will be a refurbished phone, not a new phone. So ask yourself, do you want to pay $120 for insurance plus $150 for the deductible for an old, refurbished model? And be warned that not all damage or losses are covered – so you could pay all that money and still be left without a phone.

A Better Alternative to Insurance
Next time we renew our cell phones, I’ll be doing two things: 1. Considering switching my business to another carrier, and 2. Creating my own cell phone insurance plan. Rather than pay for crappy cell phone insurance, I’ll simply add the amount we would have paid to our emergency fund each month. Then if something happens to our phones, we’ll have the money to replace them. If nothing happens, that money is ours to keep.

Now I realize that a different carrier may be no better than AT&T, but I’m pretty ticked off right now. This phone is crap, and THEY know it’s crap, but have chosen to do nothing about it. I may just be willing to sacrifice the iPhone in order to take my money elsewhere. I could get a G-Phone! By the time I can switch, they’ll have all the G-phone kinks worked out.


10 Responses to “Why Cell Phone Insurance Isn’t Worth It”

  1. Meredith on January 21st, 2010 10:00 am

    I absolutely agree that buying cell phone insurance is a waste of money and I’m an insurance broker & consultant. You will be making a much wiser choice by setting aside the premium payment in you own emergency account, as you mentioned.

    For those that haven’t had to file a claim for a lost or damaged cell phone yet: If coverage was purchased from your cell phone carrier, try to READ YOUR INSURANCE CONTRACT, in particular the “EXCLUSIONS”. This will give you a better understanding of what is/is not covered and the deductible amount.

    Also, talk to your personal Insurance Agent to find out if your Homeowners/Renters insurance policy includes any coverage for your cell phone, and ask about the deductible as well.

    There’s a good article on why not to buy cell phone carrier coverage at…/insurance/20070119_cell_phone_insurance_a1.asp

    In the long run, it’s usually better to insure the big ticket items like your house and your liability, personal belongings, car (of course)and possibly your jewelry, silver, fine arts, etc.

  2. Wojciech Kulicki on January 22nd, 2010 9:47 pm

    I’ve always just assumed that my cell phone insurance works in my favor because I tend to damage my phones so frequently (drop in water, drop on ground, drop three flights of stairs, etc…). But this post has some really great insights about why it may not be as good of an idea as I thought!

    My contract is almost up and we’ll probably be switching carriers, so this is definitely something I’ll be revisiting.

  3. Carter's Insurance Report on January 30th, 2010 11:57 am

    That is an unfortunate turn of events. It is difficult justifying cell phone insurance after hearing your story. If it were up to me, I say the store that sold you the phone is obligated to replace your phone since the insurance wast promoted but not clearly explained. The store replaces the phone but possibly keeps the customer.

  4. James on February 1st, 2010 4:10 pm

    This is %100 true true true. I had THE EXACT same thing. EXACT – Cheaply made Purple LG CU515- hinge broke after 15 months – was paying for insurance 4.99/mo – then I find out there’s a $50 deductible! The phone didn’t even cost as much as that “insurance” is going to total me if I use it to replace my phone! LISTEN TO THIS POST!

  5. Jim on February 23rd, 2010 10:41 am

    I canceled my ATT cell insurance yesterday. My Motorola Razor sustained water damage and when I contacted ATT, I was advised my phone was no longer available, but they would replace it with a LG or Samsung after a $50 deductible. I explained that I have many accessories for the Motorola and wanted the same phone. After speaking with three different people, I got nowhere. I canceled their $5 a month insurance and purchased a new, exact replacement on eBay for $99.

  6. t on October 20th, 2010 6:38 pm

    But you didn’t HAVE insurance.
    If you’d had it, it would have done whatever it says in the fine print.

  7. Aryn on October 21st, 2010 9:16 am

    My husband did actually have the insurance, and when his phone broke in the exact same place, it would have cost $50 on top of the monthly costs to get a refurbished phone with lesser features. No thanks.

  8. Almodovar on March 2nd, 2011 8:27 am

    I would recommend insurance if the phone you purchased has just been released. I would then get rid of the insurance after about 3-6 months. Why? (thats how long it takes for cellphone companies to work out known issues) I also work for a major carrier and there is always a new cellphone release every 3-6 months,a smartphone if it were to be stolen, lost etc would have a deductible of 90.0-130.00, on top of that your either paying 4.79-5.99 per month on your bill. Replacement phones that an insurance company sends out the magority of the time are refurbished anyways. After about 3-6 months you will notice the phone you purchased has gone down in pricing and might have become obselete or assuming popularity, an updated model comes out as in the case with the Samsung Vibrant. I urge you not to blow your money on these companies that sit on plenty of cake and take the hard working consumers for suckers. Instead do what Meredith on the earlier post said take that 4.79-5.99 a month save that and the deductible. (PLANNED OBSOLESCENCE) look it up.

  9. summer on July 27th, 2011 6:02 pm

    My fiance bought a htc inspire phone 5 month ago and lost it this weekend , well he made an insurance claim , and they want a noterised alfa David , the last bill , and proof of purchase ….. we don’t know where our receipt is , and they will not give us a new phone . The woman at the atnt store said they have our last billing cycle , and proof of purchase, and basically everything about our account with atnt and our phone . So now we are stuck out of a phone and payed insurance for nothing !

  10. keisha10146 on April 5th, 2012 8:03 pm

    AT&T insurance plan is one of the things that I love about AT&T. I have not had any problems exchanging a phone in the last 7 years. I have a family plan and all of the lines have insurance. I would prefer not to pay a $50 deductible,but saving the money myself every month just won’t work for me. I have experienced a situation where my current phone was out of date, and I would have to get another one, but it doesn’t bother me, because by the time I file a claim, I’ve probably grown tired of my original phone.

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