How Long Should You Keep Insurance on Your Cell Phone?

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Contributor, Benzinga
June 22, 2023

Insuring your phone can be a smart move, especially if you tend to be rough on phones, are insuring your kids’ phones or are in a long-term contract and paying for the phone monthly.

But at some point, device insurance can become redundant. Several factors determine whether device protection is still worth keeping, including your phone’s age, model, carrier and value among other cell phone features and conditions. 

How Long Should You Keep Insurance on Your Cell Phone?

Much like that streaming service you signed up for but rarely use, cell phone insurance can become a monthly expense you pay for but don’t really need. 

Even though device insurance is a good idea when your phone is new, as it loses value and new options emerge, it might be worth canceling. 

Ask yourself the following questions before you decide to cancel your cell phone insurance to be sure that you won’t need this protection in the future. 

  1. How Much Did the Phone Cost?

Top-of-the-line phones can come at very high prices. This is especially true if you decide to buy the phone outright or if you’re locked into a long-term contract rather than paying in monthly installments through a credit card. 

The cost of the phone is one of the top considerations when determining whether you should keep the phone insured. If you bought a new iPhone or Android device for over $1,000, then the period of insuring that investment is likely longer than if you’re insuring a cheaper model. 

  1. Does the Warranty Provide Adequate Protection?

If you get a new phone on a fairly regular basis, cell phone insurance might not make sense. Cell phone warranties are issued by the manufacturer and typically only last for one year after you buy your phone. These warranties only cover the phone itself and won’t cover things that happen to the phone.

For example, if the phone has an internal issue with the hardware, the operating system or any kind of malfunction that was not a result of external damage, that issue will be covered by the warranty within the designated time period. Essentially, warranties keep you from being stuck with a defective phone for one year. Any other issue, such as water damage, damage from a drop or a lost phone, will not be covered by a warranty.

If you are comfortable only being protected from internal malfunctions for a year, it might make sense to cancel additional device insurance.

  1. Is the Phone Replaceable?

Determining whether the phone is replaceable means different things to different people. The answer to this question will vary depending on your financial situation, your phone’s age and whether your carrier is offering incentives to purchase a new model.

The most obvious factor that goes into determining whether insurance is worth it is a phone’s age. If the phone is several years old, insuring it doesn’t make much sense. This is because the phone has depreciated significantly in value, and a similar model would likely come at a lower cost when compared to the price you’ll pay for your insurance. 

It also wouldn’t make much sense to continue to pay for cell phone insurance if your carrier is offering the same model at a low cost or for free. Sometimes when you sign up for a phone service plan you can get a free phone from the seller. If the free option is similar to your current phone, keeping the current one insured probably does not make sense.

Ultimately, it might make more sense for you to keep your phone insured because of your financial situation. If your insurance plan is only around $10 per month and a comparable phone, or the model you want, costs more than $500 and that would significantly impact your finances, you might want to keep paying for the insurance.

  1. Does Your Provider Offer Upgrades?

This question has some overlap with the “replaceable” category just covered, but upgrades are offered by some carriers even if your phone is not broken or out of date. In some instances, the ability to upgrade can nullify the need for cell phone insurance.

Many carriers don’t offer the same upgrade service that was common in the cell phone industry for decades, but some do. In the upgrade system, once you have had a phone for a certain amount of time, usually at least two years, you can exchange it for a new model.

When considering this along with cell phone insurance, it might make sense to cancel the insurance as you approach that upgrade period, because then you can get a new phone, making the insurance pointless. 

If your provider does not offer upgrades, then it’s likely that it ties the cost of the phone in with your monthly bill. Some carriers offer “free” phones this way, but only if you make a three-year commitment to the phone and the plan. In this scenario, cell phone insurance makes a lot of sense, because if something happens to the phone in that three-year window, you will have to pay full price for a new one if you are uninsured.

  1. Is This a Child’s Phone?

Teenagers are rougher on phones than most of us. It makes sense to research cell phone insurance and keep it active a little longer than you would for yourself if you’re insuring a phone for a child or teen. This is especially true if you are in a long-term contract with that phone or are outside of the upgrade period.

One thing to consider if you have a family plan is the ability to upgrade phones across different lines. If you do have a phone that is lost, breaks or stops working, you can use one of your other lines to upgrade to a new model. The danger in this would be if multiple devices needed upgrading but none were available, so keeping at least one or two lines insured is not a bad idea.

What Does Cell Phone Insurance Cover?

Cell phone insurance goes beyond the warranty that comes with your new phone. Usually, warranties only cover the phone itself, not anything that might happen to the phone. Warranties also typically only last for one year, so if you are in a long-term contract, it might be necessary to seek more protection.

The following are a few of the most common coverages you’re likely to find on a comprehensive cell phone insurance plan. 

  • Defects and malfunctions: Whether it’s a hardware issue or something defective, device insurance will cover it beyond the one-year warranty you likely received when you purchased the phone. 
  • Water damage: Most people have dropped a phone in a pool, spilled a drink on one or otherwise got a phone wet. Insurance covers damaged or completely unusable phones resulting from water damage.
  • Battery replacement: Many phones have batteries that lose their ability to charge fully in a relatively short time. Device insurance will cover these replacements.
  • Loss and theft: Without cell phone insurance, lost phones aren’t replaceable, and you’ll need to cover the cost of a new phone out of pocket.
  • Screen issues: Shattered or cracked screens are a big inconvenience, but device protection plans cover replacement screens for cracks or other screen defects. 

Compare Cell Phone Insurance Providers

Companies like AKKO can provide you with peace of mind through a comprehensive phone plan. Compare a few of Benzinga’s top insurance providers using the links below. 

Frequently Asked Questions

Q

Should you keep insurance on my phone?

A

You may want to purchase insurance on a cell phone if your warranty has run out, your phone is relatively new or would be expensive to replace or if the phone is owned by a child or teen. 

Q

How many years should you keep your phone?

A

Many cell phones have batteries that work less efficiently over time. For optimal performance, consider replacing your phone every two to four years. 

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.