Cell Phone Insurance Yes or No?

New technology often gives us new names and it can be a great boon for marketers when their name becomes synonymous with the thing it describes.  For example, upper case Xerox is a company, but lower case xerox is any copier, so too Kleenex; kleenex.  It is not always positive, though, when your brand is associated with a generic term, so we can’t be sure how the folks at Apple feel about the late news in cell phone land – “apple picking” — which seems to be on the rise here in the northwest and across the country.  

A smartphone can easily top $600 these days and if you have to replace one while you are already on a plan, you could be digging deep into your pocketbook.  Cell phone insurance is one way to ease the pain of a lost cell phone and you were probably offered it at the time you purchased your phone.  It is one representative of a class of product insurance that includes extended warranty coverage you can buy on everything from refrigerators to automobiles.  For large items – major appliances or automobiles, the coverage is typically for repairs only but for smaller electronic devices like cell phones or notebook computers it can include theft or breakage as well.  

Almost any time you buy an appliance or an electronic device, you are faced with that Shakespearean choice – to insure or not insure, that is the question?  It is not an easy choice.  An Apple iPhone 4g costs about $550.  Asurion – a major cell phone insurance provider will provide complete coverage for your phone for $120 a year with a $169 deductible.  Coverage that does not include theft can be purchased for less – often much less – yet loss or theft is of these small devices are one of the major reasons to consider purchasing insurance.

Some experts recommend against purchase of this type of coverage.  They note you already have elected to self-insure the first $500 of your home insurance so why would you consider a lower threshold for a single device – particularly when there is a substantial deductible on that coverage.  The jury is still out though and with the costs of each new generation of phone rising and the number of thefts growing, more people are finding reasons to say yes to a comprehensive insurance coverage plan.        

Whether you decide for or against purchasing this type of coverage may well depend on both your risk tolerance and an assessment of your personal situation.  If you are a careful budgeter, you may find a high value in paying the insurance premium and avoiding that potential hit when your cellphone disappears.  As the mother of a toddler with a penchant for throwing small objects and a puppy with a chewing problem, you may consider yourself at high risk for loss.  On the other hand, if you view the odds of losing your cellphone or having it stolen are pretty small, you might opt for less comprehensive coverage that doesn’t include loss or theft. You can even do without coverage altogether, opting to trust the manufacturer’s warranty and your own care to get you through.  If you take this last route, here are a few tips to help you.

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