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Top 10 reasons not to insure your cell phone |
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4. You may get
an apple to replace an orange. To be fair, the insurance
cost might not be so bad if you were guaranteed the latest top-of-the-line
phone as a replacement. However, most insurance contracts stipulate
that consumers receive a phone that's "comparable" to
the one being replaced. In fact, it might not even be the same model.
If you lose your phone, say, within two months of buying it you
probably would make out all right because the replacement phone
will be a recent model. However, if you lose your phone a year and
a half after its purchase, you're going to be offered a replacement
model that's a year and a half old. Because cell phone models, styling
and features change rapidly,
"No one's going to want a model that's a year
old, but that's what they're going to give you," says Keiter.
So in effect, over 18 months you may well pay $100 to $200 (18 months
x $5 = $90 insurance premium plus $50 to $100 deductible) to get
an outdated phone not worth anywhere near that amount.
3. You may get
a lemon to replace an orange. Worse yet, don't assume you'll
be getting a new phone. "If the phone is replaced, it almost
always is replaced with a refurbished phone, not with a new one,"
says Sue Macomber, consumer advocate with the Utility Consumers'
Action Network, a nonprofit utility watchdog in San Diego. And there's
no guarantee that refurbished cell phone is in great condition.
Macomber warns that her organization has received
complaints from consumers who have received damaged phones through
their insurance policies and she urges consumers who receive one
to be on the lookout for defects. "One of the things people
need to check for on a refurbished replacement is to see if there
are little dots showing water damage," she says. Most cell
phones have water-sensitive stickers inside the phone or on the
battery that hold little dots that turn red if the phone gets wet.
2. Your peripherals
may not fit. Even if the replacement phone is in good working
condition, it may be a different model from the one you previously
owned and that means your AC adapter, car charger, earpiece and
other accessories might not work with it. "You may have to
go out and buy new accessories for that phone. Those accessories
could easily cost you more than the phone is worth," says Kramer.
These items could cost $50 to $100, pushing the overall cost of
insuring and replacing your phone far beyond what it would cost
to buy a new one.
And (drumroll) the No. 1 reason not to buy cell phone
insurance is ...
1. You probably
won't lose the phone. Many people never lose or break their
phones, so the money paid out for insurance is money down the drain.
But what if you do? Try this instead of buying insurance: Every
month you have the phone put the $5 premium money into a mayonnaise
jar. If the phone is lost or stolen or completely breaks down, add
the $50 or $100 that you would have paid for the deductible and
go buy a new phone. If nothing happens to your phone, at the end
of the two years you have an extra $120.
For klutzes only
Despite all these negatives, there are some people for whom insurance
might be the best move, experts say. First, you might consider it
if you have a very expensive phone. After all, the cost to insure
a $500 phone is the same as a $50 phone. Next, teenagers may be
less careful with their phones than adults, so they might be more
likely to lose them or drop them. Even some clumsy adults may fit
that profile. You should consider it, "If the phone is for
a teenager or someone who has a proclivity to lose it or if you're
a klutz," says Keiter.
Likewise, for the person who travels a lot or handles
his or her phone a lot throughout the day, insurance may be reasonable,
says Macomber. "It highly depends on the person's individual
circumstances and their patterns of where they take their phone
and whether or not they tend to lose keys and other things."
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