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Owners Smash iPhones To Get Upgrades, Says Insurance Company
markass530 writes "An iPhone insurance carrier says that four in six claims are suspicious, and is worse when a new model appears on the market. 'Supercover Insurance is alleging that many iPhone owners are deliberately smashing their devices and filing false claims in order to upgrade to the latest model. The gadget insurance company told Sky News Sunday that it saw a 50-percent rise in claims during the month Apple launched the latest version, the iPhone 3GS.'"
than any other cell phone? i know more than a few people who have done this with more than a few different brands of phone.
FOXTROT UNIFORM CHARLIE KILO
That's why we buy support contracts. If the phone breaks *for whatever reason*, it will get replaced.
These users are getting what they were promised. That's all.
When a company offers insurance on a product where they will replace it for any reason, why do they expect anything else?
-SaNo
The gadget insurance company told Sky News Sunday that it saw a 50-percent rise in claims during the month Apple launched the latest version, the iPhone 3GS.
Next week, the insurance company will tell Sky News they saw a new 50-percent rise in the claims after they published the article...
how about linking to the original article instead of a blog entry attempting to get page views by copying chunks of the article?
Then the smart thing to do is to buy up a bunch of 'older' phones and give them to the poor customers that accidentally attacked their phones with a hammer. Typically in an insurance situation, you don't get upgrades, you get a replacement for what you currently have.
Faster! Faster! Faster would be better!
Comment removed based on user account deletion
I mean, seriously, $8.99/month + $100 deductible? That means, after one year, you've paid about $200 for that "free" replacement. Which is REFURBISHED, by the way!
What do they expect?
The insurance companies need to stop their bitching.
The Institute of Incomplete Research has determined that 9 of out 10
Least it's not as bad as two in three.
There is a more or less fundamental problem with insurance, that is ever pushing against your ever getting customer service(which is a pity; because insurance can theoretically serve a very useful function).
When you buy insurance(either with a lump sum payment at point of sale, or with monthly premiums), the insurer is already as well off as they will ever be, with respect to you. Up until that moment, you were a customer now you are just a cost center. Now, in the real world, regardless of legal obligations, appeals to ethics, or fancy economic analysis from the IT department claiming that they actually save the company money, cost centers have a way of getting the bare minimum, and that grudgingly.
In a theoretical highly competitive(and ideally liquid) insurance market(and, of course, assuming near-perfect information), competition would help keep this in check. If you didn't treat your cost centers well enough, you'd have fewer customers in the future. Unfortunately, gadget insurance isn't all that competitive or liquid(it is generally bundled by the seller at the point of sale, and the primary competitor is "no insurance at all" rather than a selection of other insurance options, and it is generally either a lump sum or part of a carrier contract, so you can't really switch providers).
The ability to pool risk is really nice. However, the "customer/cost center" problem largely ensures that the insurance experience will be shit. They already have your money, you just have a conditional-IOU, and every dollar they can weasel out of is a dollar they get to keep.
5 seconds in a microwave is about all it takes for pretty much anything with a circuit board that will fit inside.
Casca
As far as I can tell this is standard operating procedure for insurance companies.
They'll happily take your money in exchange for 'insurance' for X. They get your money, you get peace of mind, it's all hearts and flowers.
It's just that if at some point you want them to follow through on their end of the deal... Well, then you're obviously a cheating, swindling bastard bilking them out of their money. Any excuse to deny a claim; if they can't manage that often enough they'll lobby for changes in laws to make it easier to do in the future.
The nerve of some people, expecting insurance companies to pay up when they make a claim.
Moral hazard is part of the insurance business- hire some people who are better at math so you can price your insurance product accordingly.
When people decided that having a fire brigade was a bad idea because it meant that a bunch of guys depended on there being regular fires..... Or maybe not... in fact, it is nothing like that.. carry on...
AT&T makes money off forced "upgrading."
I had a flip-phone model. Had it die on me (internal speaker died, would only work in speakerphone mode). Called in my warranty, got the "replacement"... it's a SLIDE-phone instead of flip (meaning the screen is unprotected).
Called them up, turns out they have a clause in the contract to ship back whatever the fuck phone it is they can with "similar features" if yours is out of production... and the lines go "out of production" every 6 months.
Where do they make the money? Constantly changing accessories. Car charger? Bam. No good. Extra house charger I kept at work? Bam. No good. Belt clip? Bam, no good. Thank god I hadn't bought the "proprietary" handsfree set too.
$100 worth of accessories, down the tube, "not covered" simply because they ship a different model phone incompatible with the accessories you bought right along with the damn phone in the first place.
There's not exactly any shortage of refurbished iphone at the time new models come out. Honestly, I think this entire story is bullshit, this company is trying to get viral marketing to sell a lot more policies.
"iPhones, like most mobile phones, are actually very difficult to damage.
I don't have an iPhone, but I know for a FACT that it's damned easy to ruin a phone accidentally. My (now ex) wife dropped our new Star Tek in the coffee when we were travelling; bye bye Star Tek. I got caught in a thunderstorm at a George Thorogood concert at the Illinois State Fair; bye bye LG. I slipped on the ice and fell with my phone in the pocket I fell on; bye bye Nokia. Dropped my Razr in the toilet while trying to answer it when I was pissing; despite immediatekly removing the battery and washing it and drying it out, it was ruined, never to work again.
My daughter (who turns 23 next month) has broken a lot more phones than I have, but that's because she keeps it in her purse. Women are notoriously hard on purses, which are a lot more forgiving of abuse than their contents are.
Anybody who says it's hard to break a phone is either stupid or lying.
Free Martian Whores!
"but is actually not bad at connectings"? O.o
Seriously?
If you go into a store, give them money for a product, and they start treating you poorly, you can demand your money back and walk out. You can't do that with an insurance company, specifically because of the timing.
After all, I am strangely colored.
There is a more or less fundamental problem with insurance, that is ever pushing against your ever getting customer service(which is a pity; because insurance can theoretically serve a very useful function).
When you buy insurance(either with a lump sum payment at point of sale, or with monthly premiums), the insurer is already as well off as they will ever be, with respect to you. Up until that moment, you were a customer now you are just a cost center. Now, in the real world, regardless of legal obligations, appeals to ethics, or fancy economic analysis from the IT department claiming that they actually save the company money, cost centers have a way of getting the bare minimum, and that grudgingly.
Insurance companies figured out hundreds of years ago that they needed to make sure the insurer had a definite self-interest in the preservation of the asset being insured. If not, I could take out insurance on someone else's ship and sink it, pocketing the full payout. Likewise, I would have no incentive to preserve a ship if it were a leaky wreck when I bought it and my intention was all along to sink it for the insurance money. Things become murkier for the investigator when I did indeed buy the ship for a legitimate business and circumstances turned against me. I could then try to sink the ship for the insurance money if I'd make more on the payout than selling it.
I think gadget insurance is pretty crazy to begin with. Insuring cars, yes, especially gap insurance. Nothing sucks more than crashing a two year old car and realizing you have to finish off payments for it plus the replacement. Insuring your house makes sense. And few people are going to burn down a house with all the valuables inside just for the payout. But an interesting point for fraud investigators, if someone is claiming the house as a primary domicile and it burns down without valuables and irreplaceable personal possessions inside, that's a big warning sign for fraud.
The sad thing is that you may have to buy insurance on products these days simply because they're made so poorly. Among coworkers and friends, there are so many stories of netbooks and laptops crapping out, especially HP's. If a $400 device won't even last you a year, maybe you should buy the insurance. You're going to need it.
I'm wondering if maybe a better model might not be leasing the equipment instead. You subscribe to the iphone, send the old one back when the new model comes out. I wouldn't feel so bad about it if they could properly break these things down into constituent molecules and recycle. It just feels awful to chuck expensive electronics every other year. It feels like sin.
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
Until AIG figured out it could make money coming and going by insuring other peoples assets - if they actually had to pay out the government would save them.
Gadget insurance is idiotic. The only people who carry it either (a) can't take care of their shit, or (b) intend to defraud the insurer. Because of this the premium/deductable schedule is such that you only win if you file a claim every three months - at which point the insurance company decides you're trying to defraud them and your denied coverage - and you lose any way.
Gap insurance only makes sense because a lot of people are idiots and will carry it even after they car is worth more than the loan. If you cancel it as soon as the blue book value matches yoru loan balance (usually ~12-18 months) you bought a useful service.
As for extended warranties - don't buy them. Not on cars, not on electronics, not on anything. Your laptop or your car is either going to break in the first six months and be covered, or isn't going to break until after the extended warranty is up. Even if it does break in the sweet spot, odds are what you paid for warranty coverage is about what it costs to fix your problem.
What's the difference between a subsidized product with a contract and a lease? Not much. The cell phone market is functionally a leasers market today, the only difference is that the asset has nearly completely depreciated (at least as far as resale is concerned) in the lease term.
I new it was trouble using both lose and to yours in a sentence. Those should both be you're.
Next time I'll try to effect more affective grammar.
Arguably, buying insurance because devices are uniformly shoddy is a terrible strategy.
Since the insurer needs to make at least enough money to eat and keep their lights on, the cost of insurance for a device is always going to be(at least slightly) higher than the average cost of device replacement across the insurer's customer base.
In situations where failure is quite rare; but quite expensive, paying the premium is generally sensible. If the devices are cheap; but fail often, it makes a lot less sense. Cost of insurance is always greater than average cost of failure across the insured population and, with highly unreliable devices, your personal risk of failure is increasingly close to that of the average risk.
For gadgets specifically, there is arguably one exception to the above rule: 1st party warranties. It is still the case that the company doesn't want to lose money, on average, by offering warranties, so the cost of warranty coverage will be slightly greater than the average cost of failure under warranty; but there are a couple of ancillary advantages that can make up for it. First, 1st party warranties are good if you simply must have large numbers of identical machines. For consumer purposes, getting model N+1 when model N breaks is a bonus. For corporate and institutional purposes, that would basically be useless, because of administration costs. So, having a first party warranty that assures repair or replacement of model N is valuable. Second, 1st party warranties help align the incentives of the buyer and the seller:
If Dell is selling me "a computer", their only incentive to make sure that it is long lasting is the possibility that I'll get pissed when it breaks and buy an HP instead next time. If Dell is selling me "A computer, guaranteed for 5 years", they have an incentive to chose better components(since providing warranty replacements also has Fedex, call center, inventory, and refurb costs, there is suddenly a financial incentive for them to spend the bit extra on capacitors that won't leak, or better engineering, or whatever.) Since device failure sucks for the customer as well, having a warranty helps align both parties interests.
3rd party warranty/insurance outfits, though, don't have any control over production quality, so they don't have this effect.
Dear iPhone insurer: Your customers want to upgrade to the latest model each year, so just build a 'free' annual upgrade into your price. Instead of taking a hammer to their phones, your customers will send you their *working* phones (which you can resell) and you'll deal in bigger volume, perhaps enjoying some added economies of scale.
NOT 3GS! And FINGERS TOO BIG to work TOUCHSCREEN! HULK SMASH!!
(later, Bruce Banner fills out the claim form...)
Hmm.. "cause of accident." (Types Superhuman alter ego resulting from bombardment of gamma radiation and adrenal rush. Frustrated with user interface. Smashed phone in rage.. Considers it for a moment. Deletes and types in Fell out of moving vehicle.)
Prisencolinensinainciusol. Ol Rait!
I never buy insurance for my iPhones because I know that I'm going to want to upgrade them each year. It never occured to me to smash and replace. I wouldn't want to do that though. On the other hand, sell me a policy where each year I get to send in my old iPhone and get a new one and I'd be all over that. The insurer could then sell my old iPhone or use it to replace someone with cheaper insurance who didn't buy the upgrade option.
Risk pooling only makes sense if there is a small chance of a very high cost event happening.
My phone stopped working so I have to buy a new one doesn't cut it.
Someone rear ended me at a red light and now I have a $70,000 hospital bill does.
I agree that it's not fraud, but it's an underhanded way of increasing the profit on a sale. It's like playing the gambling - it's a task on people who don't understand statistics. Unlike gambling, I've never heard someone call buying insurance "fun."
GP:
"In other words, you cover stuff that doesn't really matter."
You:
It isn't fraud...The only time it's fraud, is when the store sells an extended warranty that is so limited by its terms as to be entirely useless.
By your very own definition what the GGP and GP were describing IS fraud. The kid has basically been trained to lie about the product, implying it covers everything when he in fact knows that it basically covers nothing. So it's fraud on two counts, by the product being largely useless and the sales person misrepresenting the product. This type of thing happens all the time at Buy More...err...Best Buy and the like.
And I saw a bull SERVICING a cow the other day, too. The fraud is in the misrepresentation of the risk/benefit of being part of the "risk pool". In short, if you buy the insurance every time, you lose in the long run unless a ridiculously high number of products which you buy fail. If you don't get the insurance, then you win overall unless, again, a ridiculously high number of products which you buy fail. Salesmen prey on the fact that people, as a whole, are demonstrably bad at assessing real risk.