What’s the best way to insure your phone?

You buy a new phone, its all shiny and expensive, and you’re worried about it being damaged or lost. We’ve all been there. The question is: what insurance is the best to deal with it.

My answer is: self-insure. Yes, that’s right, the risk is not worth the premium you’d be paying.

Consider the costs (AT&T as an example, but its not significantly different with other providers):

You pay $6.99 per month –  that’s about $84/year.

Add to that $200 deductible (for the more trendy devices such as an iPhone, see the list here).

So you’ll pay for the replacement phone ~$280, while you got the new one (assuming you signed up for a 2-year contract) for about $200. Less, in many cases. Usually, the replacement phone you get will not be a new one, but refurbished, and a year after the model was introduced its already an “old” model selling for free or low price (with a new contract). Breaking a contract on AT&T costs $200 after 12 months of service (less after longer periods).

So in case of a disaster – you just get a new phone for $50 with a new contract (which will get you the same or newer model, and probably new and not refurbished). Even when adding to that the $200 early termination fee for the old contract, after 12 months you end up with a cheaper replacement without the insurance than with it.

So unless you lose/break your phone more than once a year – the math speaks for itself: the insurance is not worth it.

Hope it helps,

Your Little Adviser.

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