it comes to insurance products, extended warranties are
the black sheep of the family, regularly derided by
consumer advocates as being too expensive for the
protection they provide.
there’s an allure, especially for the risk-averse
consumer and especially for the gorgeous new smartphones:
the iPhone 6, Galaxy S5, et al.
you buy an extended warranty for the pricey new computer
that you pull out of your pocket dozens of times per
day? Do smartphones’ new features and bigger screens
change the answer to that question?
the answer will depend on which arguments resonate with
you. Here’s what to consider:
say no. A simple, blanket answer to the warranty
question is to avoid them. Says Consumer Reports:
"Pass on phone insurance, which runs about $7 to
$11 a month, or up to $264 over two years." It said
1 in 5 respondents in its survey had to replace a lost,
broken or stolen phone, "so you probably won’t
collect. If you do, you’ll face a deductible of up to
$200, and the replacement may be a refurbished
that hangs out the dirty laundry of phone warranties,
but it doesn’t address the details and options. For
example, some warranties cost less per month and have
far lower deductibles. And some might think a 20 percent
chance of needing the warranty actually seems pretty
say no, Part II. The golden rule of insurance is that
you don’t insure against little things, just financial
card coverage. Many credit cards will extend a
manufacturer’s warranty for free if the card is used
to purchase the device. Some might provide theft
protection, and a few provide accidental damage if you
use the card to pay your monthly wireless bill. It’s
worth checking on the benefits of your cards.
Check to determine whether your existing homeowners or
renters insurance covers electronics, or whether you can
get a personal articles policy to cover the phone.
and drips. Smartphones are quite reliable, and if you
have a defect, you’re likely to discover it quickly,
when it’s already covered by the retailer return
policy and manufacturer warranty.
means the value of warranties is mostly about accidental
damage, namely cracked screens and water damage, far and
away the top accidents with phones.
reliable until you drop yours in the toilet," said
Jessica Hoffman, spokeswoman for SquareTrade, a
third-party extended warranty company.
Your Bubble, another warranty company, expects cracked
screens to represent 58 percent of 2014 smartphone
warranty claims, while water damage is expected to
account for 30 percent, with manufacturer malfunctions
representing the rest.
life hub. Reaching for your smartphone is already a
national addiction and likely to grow as consumers start
using phones to pay for items at cash registers. It’s
yet another instance when a consumer is pulling the
phone out of a pocket or purse and potentially dropping
it. And as phones incorporate health-tracking functions,
consumers will be exercising more with their phones,
which presents damage risk.
not as durable as your car keys, but we treat them like
that," said David Anderson, director of product
development for Protect Your Bubble.
are pricey. While you might have paid only $200 or $300
for your phone, its true cost is more like $600 to
nearly $1,000, something some consumers learn only when
they go to replace a damaged or lost smartphone and they’re
still under contract with a plan that subsidizes the
cost of the now-broken phone.
be pressured. It might surprise some buyers that you don’t
need to buy a warranty at the exact moment you purchase
the phone — although it won’t be covered until you
do, and some require a warranty purchase within 30 or 60
days of buying the phone.
offerings. The primary venues for extended phone
warranties are from wireless carriers, third-party
warranty companies and retailers that sell phones.
generally favor AppleCare+ for iPhones and SquareTrade
for many types of electronics.
few highly rate warranties offered by wireless carriers,
such as Verizon Wireless or AT&T. The warranties
tend to be expensive, about $10 per month, and have huge
deductibles. Both those carriers, for example, charge a
$199 deductible per claim. So if you break your phone 12
months after you bought it, you will have paid about
$320 to get it replaced or repaired, maybe more than if
you had it repaired on your own. Moreover, under some
plans, you might get a refurbished phone as a
replacement instead of a new one.
the big plus of wireless carrier plans is that they
usually cover loss and theft, while many others do not.
warranties, from the likes of SquareTrade and Protect
Your Bubble, are less expensive than wireless carrier
plans, both monthly premiums and deductibles. For
example, SquareTrade’s monthly cost for an iPhone 6 is
$5 per month or $99 for two years, with a $75 deductible
if you make a claim. Protect Your Bubble is about $6 per
month with a $50 deductible.
warranties offered by retailers come in widely different
types, with some more like the wireless carriers, while
others offer the SquareTrade brand.
monthly. One idea if you’re uncertain about making a
big upfront commitment to a warranty is to pay monthly
to protect your phone when it’s brand new. That way
you can insure the phone during the most expensive
period of its life — before used ones are widely
available for sale, for example. You can cancel the
warranty when you feel you don’t need coverage
replacement phone online. If you’re savvy about phones
and online shopping, you can buy a replacement phone on
the Internet, potentially cheaper than the cost of
warranty premiums plus deductible.
for speed. Before you buy a warranty, check details on
how you would receive a new phone or get your old one
repaired. Some services, such as SquareTrade, offer the
option of replacing the phone overnight or going to a
repair shop, including an Apple Genius Bar for iPhones,
to have the phone fixed, and they will reimburse you.
screens, bigger trouble? The trend in recent years is
toward larger smartphone screens. "We found that
screens that are greater than 4 inches are 25 percent
more likely to break," Hoffman said.
screens simply have more surface area to crack, Anderson
as phones get bigger, consumers might be more likely to
skip using a case because that makes the phone that much
half of phone users, 48 percent, don’t use a case
because it adds bulk when carrying the phone, according
phones. Using a phone case, especially the sturdier
ones, can mitigate the chances of a break and the need
for a warranty — although most won’t help with
submersion in water.
an interesting twist of logic for those averse to phone
cases: You could rationalize spending $100 on a two-year
warranty because it’s mitigated by the cost of the
case you didn’t buy.