Have you ever wondered, “If I have a warranty, do I need a protection plan for my phone?”
Yes and no…
Ok, that’s not a great answer, but it’s just not that simple anymore.
Years ago when smartphones first hit the market, all you had was the warranty and maybe a small protection plan by the carrier or manufacturer. But today it’s different.
There are warranties, warranties plus, smartphone insurance, protection plans, etc. They are all different and cover your phone against multiple types of hazards. The costs will range dramatically. How many claims you can make per year can vary? How much is the deductible you will pay? Because of the diversity of options, let’s simplify the landscape, so you will be confident about what you need to protect your phone.
There are three basic types of coverage you can get on your phone: warranties, insurance, and protection plans. Each will have a distinct difference, and we can help you identify them.
Let’s go through each one.
3 Types of Phone Protection Plans
There are three common ways to protect your phone beyond what the manufacturer or provider offers you. It is important to understand your options in order to find the best one for you.
Basic warranties or service warranties are provided by the manufacturer. Typically you pay upfront for 1, 2, or 3 years of additional coverage. Eventually, you will be offered opportunities to renew this coverage.
Warranties will cover device malfunction, but they will not cover lost and stolen phones. Neither will they cover the most common problem with smartphones — breakage due to dropping the phone.
Warranties with Accidental Damage
These warranties expand on the basic coverages with “accidental damage from handling.” This basically means if you dropped the phone and break it it will be covered under this warranty. Like all warranties, you need to read the terms and conditions to understand the deductible you may be paying, the repair conditions, and then hazards covered.
Many manufacturers will extend this feature to cover any hardware issues in the first year of the phone. Often this will be included in the cost of the phone, but the coverage is very limited. It will not cover accidents or lost or stolen phones. Repairs can be difficult with limited warranties.
Like most products with similar warranties, you will need to provide proof of purchase and submit to an authorized facility.
Tampering with the phone such as jailbreaking it beyond the manufacturer’s specs will usually void any warranty. Don’t try repairs on your own either. This will also void the warranty.
If the protection covers theft and loss, you have phone insurance. Sometimes the product may be called a protection plan, but the addition of these two coverages distinguish it as insurance.
These two coverages greatly increase the price of coverage. By adding theft and loss, you might be paying more than you need. The most common problems with phones are hardware or breakage. Theft and loss are small hazards. You should ask yourself: “Are in a high crime area that would cause you to need for theft coverage?” Or, do you typically lose high ticket items? If those things are true then spending extra to purchase insurance may be necessary.
Insurance typically ranges from $7 – $20 per month. A deductible will apply and can vary based on the cost of your phone and the type of repair needed.
3. Protection Plans
Protection plans are similar to an extended warranty. Rather than coming from the manufacturer, they are designed by the phone carrier or a third-party vendor. They will protect you against breakage. The breakage can be hardware related such as a port or speaker or internal cable. Breakage can also refer to accidental damage, such as dropping your phone and cracking the screen.
Like insurance, most plans come with a deductible depending on the repair or replacement of the device.
The major difference between protection plans and insurance is theft and loss coverage. These will not be covered under protection plans.
Choosing the Right Provider to Protect Your Phone
All plans today are sold by the manufacturer, phone carriers, and third-party sources. Let’s look at each and see where the advantages are.
Phone Carriers & Manufacturers Protection Plans
The benefit of buying from a carrier is convenience. At point of sale, you can add coverage to your monthly bill. The carrier is not administrating the plan, but they often advocate for you during a claim. It allows them the perception of greater customer service. The reason the carrier offers you so many different options is not merely because of profit. Buying extra features deepens your customer relationship and makes it much less likely you will leave for another provider.
Here’s a review of various carriers and manufacturers protection plans:
Verizon Total Mobile Protection:
- Can cover multiple phones on one plan
- $13 / month per phone.
- Deductibles will be applied
- Covers Theft & Loss
- Must be a Verizon Customer
- Must be a Sprint Customer
- Repairs are heavily discounted.
- Cracked Screens are only $30
- Covers theft and loss
- Deductibles are high beyond minor damage. $50 – $300
- Various Plans Based on Coverages and Number of devices
- $9 / month for basic coverage including theft & loss
- $12 / month includes 24/7 tech support, 50GB of photo storage, and identity protection
- $35 / month is an upgrade for up to 3 devices with more storage capacity
- Must be an AT&T customer
Samsung Premium Care:
- Only for Samsung Devices
- $12 / month
- $99 deductible per repair
- Must sign up at the time of phone purchase
- Does not cover theft & loss
- Extends Apple warranty for up to two years
- AppleCare+ adds accidental damage protection
- Deductibles range from $100+
- 2 Damage Claims per year
- No Coverage for theft or loss
- Must use an authorized retailer or Apple store
Third-Party Phone Protection Plans
A major benefit of using a third-party is cost. Their are two major third-party vendors for Phone Protection are SquareTrade and Geek Squad from Best Buy. And a new provider, TessaB Protect, with a unique focus.
Backed by Allstate, SquareTrade offers protection plans on many types of electronics in addition to mobile phones.
- $9 / month for accidental damage protection
- $12 / month to add Theft & Loss
- Not tied to a device or provider. You keep your plan even if you switch phones.
- Deductibles range from $25 – $149 depending on the claim
Best Buy’s service offering allows you to unbundle insurance and accidental damage protection.
- $8 / month for accidental damage protection
- $11 / month for theft and loss
- Deductibles vary based on the cost of the phone.
- Battery Replacement coverage. Limit one replacement per phone
- One time payment option for up to 2 years of coverage.
- Must be purchased with the product online or in-store.
- Service fee is charged for replacements. Charge is based on the cost of the phone. For example, a $200 phone will be charged $50. A $500 phone will be $120.
30 days after purchasing a phone, it’s nearly impossible to get a protection plan. An innovative startup, TessaB Protect, seeks to change that with a focus on accidental damage plans for both new and pre-owned phones.
- Coverage starts as low as $4 / month for accidental damage protection
- Deductibles as low as $25
- No receipt required for claims process
- Available on pre-owned phones sold on Glyde.com
- Soon you can protect qualifying phone models that passes diagnostics testing on their mobile app
Phone Insurance Companies
Insurance companies have entered the market for cell phone protection. Some companies have developed their separate brands. SquareTrade is actually an Allstate brand to offer cell phone coverage.
Most insurance companies will allow you to add phone coverage to your homeowner’s policy. Doing so can be convenient, but there are disadvantages to adding it to homeowners or renters policies. If you have a cell phone claim, it will be charged against you and could cause your homeowners premium to increase at the next renewal.
Depending on how it is covered, you may or may not have a deductible. Any loss will be added to your claim record and could make it difficult for you to find reasonably priced home insurance in the future. Also, if you have had other claims such as wind damage or fire damage to your home, a small cell phone claim could be enough for a company to cancel your coverage.
Credit Card Companies that Offer Phone Insurance
If you pay your monthly smartphone bill with a credit card, you might be able to find phone protection through the credit card company. Certain cards such as the U.S. Bank Visa Platinum, Wells Fargo Propel, American Express, and the Deserve Pro Mastercard offer protection plans.
Again like any third-party plan, make sure you understand all the terms and conditions.
6 Questions You Should Aske Before Purchasing Phone Insurance
What coverages do you need?
We reviewed this option early when we discussed theft and loss. But the hazards can be broad. More than likely if something goes wrong with your phone it will be hardware related or damage due to breaking the phone. Make sure you pay for only what you need.
What are the deductibles?
No matter which forms of protection you choose, there will be a deductible. Deductibles can range as low as $19 and as high as $250. Each provider is different here. Many will have one flat deductible that is paid during each claim. The more common option is that deductibles vary based on the cost of the phone and the type of repair.
How many claims can be made in a year?
This is a limitation placed on protection plans to prevent customer fraud. It would be unreasonable for any company to protect a customer that has several claims per year. However, as your phone ages the chances of multiple parts failing increases. If you claim your screen, then later you volume buttons died, and then another month later the power port quits, you may not have coverage for that third claim.
Limitations are also placed on how often and how many times a company will replace a battery as well.
How does the plan handle replacement phones?
Some companies will find you a replacement phone and deliver it to you. Rarely will they upgrade you in the process, unless you buy the protection from a carrier. But even then, the upgrade will cost extra.
Other companies will offer you the money in the form of a check or debit card to purchase your replacement phone. Consider this option, because you may not be given enough to purchase the exact phone you at current market values.
Where is it repaired?
Each plan will specify where it is to be repaired in order for the claim to be paid. You may have to take it to a specific repair facility or mail your phone to the manufacturer. Other plans could take a broad approach and allow you to take the phone ay shop that meets certification requirements.
Is the cost worth it?
Let’s use a specific example based on the Geek Squad’s pricing. You can perform this exercise on any plan or phone. You have the newest iPhone and it cost you $1200. The best package Geek Squad offers will cost you $11/month. After two years, you’ve spent $260. During that time, you have a service problem. The service fee to repair will be $200. At this point, you’ve spent a little more than a third of the cost of the phone protecting it. If you lose the phone, your deductible will be $250.
Are those costs worth it? Could you have saved $11 / month and paid for your own repair? What are the chances you will lose the phone?
For a high-priced phone, it might be worth getting coverage, but maybe not for a less expensive phone. That’s where new innovative providers like TessaB Connect are filling voids in the market. And it makes sense, why do providers need to charge everyone the same price? If you buy a pre-owned phone that costs $400 dollars, why should you pay the same as someone with a new $1,000 phone. Assuming you could even qualify for a protection plan.
Back to our original question. Do you need a protection plan on your phone? After reviewing the options and pricing, you probably know the answer. It depends on the value of your phone and how you use it.