Six Reasons You Should Never Buy iPhone Insurance

There are cheaper ways to protect your smartphone

Buying an iPhone means spending hundreds of dollars upfront and thousands of dollars over the course of your phone contract. With that much money going out, it might seem smart to also buy iPhone insurance to protect your investment. After all, the thinking goes, you'll be totally covered against theft, damage, and other mishaps for just a few dollars a month. 

When you dig into the details of what these insurance plans really offer, though, they stop looking like such a good deal and more like something that's going to upset you if you ever have to use it. Here are six reasons you shouldn't buy iPhone insurance and one suggestion for how to get extra protection if you want it.

01
of 06

Monthly Costs Add Up

Monthly phone bill costs
image copyright me and the sysop, via Flickr

Part of having iPhone insurance means paying a monthly fee, just like traditional insurance. You may not notice the fee since it's included in your phone bill and a few more dollars isn't usually obvious. Still, these fees mean you've got extra money going out every month. Plus, when you add it up, two years of fees can total between US$165 and $240. Some companies offer flat fees—$99 for two years, for example—that are better deals but, for the upcoming reasons, they're still not a great idea.

iPhone 5S
image copyright Apple Inc.

Just like with other types of insurance, when you make a claim, there's a deductible. This means you'll either have to pay this fee as part of your claim settlement or that money will be deducted from your settlement. Deductibles run between $50 and $200 in most cases. This can be a good deal if your phone is totally ruined and you have to buy a new one at full price, but if you just need a repair, or are eligible for a discounted upgrade, your deductible might cost more than the repair or new phone.  More »

iPhone 4 in wood shavings
Joseph DeSantis / Contributor/Getty Images

This is one of the hidden gotchas of many iPhone insurance policies. Even after paying your monthly fees and deductible, when your insurance company replaces your broken phone with a working one, that replacement often isn't brand new. Rather, the phones that insurance companies send are often phones that were sold used or broken and that have been refurbished. For your hundreds of dollars, wouldn't you rather have a new phone? More »

04
of 06

Poor Customer Service

Customer service rep
Richard Drury/Getty Images

Nobody likes getting the runaround, but that's just what many iPhone insurance customers have reported on this site. Readers have complained about rude employees, lost paperwork, delays in getting replacement phones, and more (in fact, no product is worse reviewed by readers of this site than iPhone insurance). As a paying customer, good customer service should be a given.

05
of 06

Limits on the Number of Claims

Brick wall
image copyright Bartosz Mikołajczyk, via Flickr

This isn't true of all insurance plans, but some of them limit the number of claims you can make during your policy term. For instance, some policies limit you to two claims in a two-year policy. Have the bad luck to have a phone stolen or break a third time in two years? Your insurance won't help you then and you'll be stuck paying full price for a new phone. 

Cracked phone
Patrick Strattner/Getty Images

Insurance companies provide coverage for loss, theft, damage, and other calamities, but they can't help you with the day-to-day frustrations technology often confronts us with. If you're having a software problem, or just have a question, your insurance company can't help you; you'll need to find answers somewhere else.   More »

Your Best Option: AppleCare

With so many reasons to avoid iPhone insurance, does that mean you're completely on your own in a world that's often hazardous to phones? Not at all. You should seek your help from the same source where you buy your phone: Apple.

Apple's extended warranty program, AppleCare, is a great option for people who want ongoing coverage for their phones. Not everyone will find it a good deal (if you upgrade every time you're able, or when a new phone comes out, it may not make sense for you), but for those who do, the benefits are many.

For $99, AppleCare for iPhone offers the following:

  • 2 years of coverage
  • Technical support over the phone or at Apple Stores
  • 2 repairs, each with a $79 fee
  • Express replacement
  • Can be resold; if you sell your iPhone used, you can get extra money for the AppleCare coverage.

The drawbacks of AppleCare are that it doesn't cover stolen phones and that repair incidents are limited, but even if you used both repairs during the two-year period, the $260 total ($99 + $79 + $79) will be about the same, or less, than equivalent costs with most insurance companies.

The Bottom Line

Insurance or extended warranties aren't required purchases for all iPhone users, especially when discounted upgrades are available every two years. You'll have a good idea about whether your phone might get broken or be stolen before you're eligible for a new phone. If you need the extra coverage, make sure you know all the details before you make your purchase or, when the time comes to use your insurance, you may be sorry.