Buying cell phone insurance should be thought through as much as getting health or car insurance. You shouldn't trust a company to explain all of the "fine print" or one that cannot give you all the answers. You'll want to know the answers to these 10 questions before buying phone insurance.
- Do you cover my phone?
Many cell phone insurance companies choose not to insure older phones at all. If you have an older phone, you should ask if it's covered and what happens in the event of a claim. Generally, insurance companies attempt to fix a phone before replacing it. Older phones will have parts that are more difficult to find. If they cannot find the parts, the company will choose to replace your phone. If the same phone cannot be found, it will encourage you to purchase a different one. Always be sure your phone is covered under the plan.
- How much is the deductible?
Many insurance companies will make you pay a deductible before they will pay for a new device. Depending on what phone you want to insure, the deductible can be quite high. The price usually varies from $50 to $200 depending on the company and plan. Be wary of companies that say they do not charge deductibles. These companies hide the deductible in an "administrative fee."
- What does the plan cover?
Some plans choose not to cover certain things such as water damage. This means if you have to make a claim and it involves damage from any liquids, your claim will be denied and you'll have to pay for the phone yourself out of pocket. Most plans cover physical damage, loss, or theft. Be sure to ask precisely what a phone insurance plan covers before purchasing.
- How much is the monthly payment?
Monthly payments also vary from company to company. Some companies, like T-Mobile, base your monthly payment on your phone rather than an across-the-board price. This means if you have an older model phone, you'll save money compared to someone who owns the newest device on the market. Other companies, like AT&T, will charge a monthly price. For AT&T, the price is $6.99. Make sure you know your monthly payment before entering a phone insurance plan.
- Do you cover lost equipment?
Some companies may even cover equipment that is lost in the process. Each year, you'll have an equipment limit that will cover anything that cannot be recovered for a claim. If you lost an Otterbox with your iPhone, the company will replace the protective casing as well. Inquire whether or not the company chooses to cover equipment along with the device.
- Do you require the phone upon claim?
Depending on the reason for the claim, some companies request that you send them the phone when you file a claim. This is usually the practice for hardware or physical damage. The company will assess if they can repair the phone, or issue a new one if it cannot be repaired. However, this is done only if you send them the damaged device.
- How many claims can I make in one year?
How many claims you can make per year is a huge question. If you are someone who is accident prone, you may need to make several claims in one year. Some companies only allow you to make one claim per year while others allow up to three. Be sure to figure out which plan works best for you.
- What are claim limits?
While some companies may let you make several claims a year, you may be stuck with a limit. This can be per claim or per year. Most companies that cover equipment loss have a limit of $1,500 per claim. This covers the cost of your device and your equipment. With phones ranging from $500 to $600, this limit may seem high—but it can dwindle fast.
- How do I make a claim?
If you ever need to make a claim, you'll want to know the process. As mentioned before, some companies require you to send them the phone. If you damage your phone and throw it away, there's no way to make the claim. Other companies require you to call them immediately after or file a claim online. You should ask about the claim process before you subscribe to a plan.
- Can I cancel at any time?
Before you purchase any phone insurance, you should be sure you can cancel. Maybe you've gone years and you realize you don't need it, or the company isn't providing quality service. You want to be sure that you can cancel at any time and you're not stuck under a contract.