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Ask Slashdot: Best Protection Plan For Your Phone?
First time accepted submitter nastav writes "Now that I'm eagerly awaiting the delivery of my new shiny iPhone 5, I'm faced with a dilemma — SquareTrade, Applecare Plus, or some other insurance option? I have used SquareTrade in the past for my iPhone 3GS and iPhone 4 (I skipped iPhone 4S). It provided Accidental Damage Handling (ADH) for the iPhone before Apple introduced its own version of ADH. I've had the opportunity to file claims with SquareTrade multiple times, and they handled it quickly and professionally each time. Now that there is a product from Apple itself, I'm not sure which one to get. They are priced similarly (~$100 for a two-year plan, $50 deductible for each ADH incident) Apple limits the number of ADH claims to two, whereas SquareTrade (AFAIK) limits the number of claims to the 'value of the product,' which translates to approx. 600 USD in coverage (or about 4 ADH claims). I've tried reading many comparison articles on the internet without definitive answers. I'm hoping that the tech-savvy folks on Slashdot would help out with a discussion on pros and cons of each, and perhaps add other options into the mix."
The insurance is roughly 1/3 the cost of a replacement. Do you really think the odds of loss are so high that you need to pay that premium?
Self-insure it. An insurance company pays out much less money than it takes in. It has to be that way or it wouldn't be a worthwhile business. Thus the chances are that you will get less out than you put in. It's a form of gambling, and the odds are even worse than the casino.
So, if it's a risk that won't cripple you financially if it happens, it's not worth insuring. You have to insure the car, and you probably want to insure the house, because that would be crippling if it burned down. But for something where the risk is only a few hundred dollars or less, insurance isn't worth it.
You could literally self insure, by putting the amount they would otherwise have spent on insurance in a separate account. From which you withdraw money when a bad thing happens. But it probably is better just just do it in the old-fashioned way, and just always have enough money saved up "for a rainy day".
Don't even have to be *that* careful. I've owned several smartphones since the G1 (well, Canadian version, which was called the HTC Dream), and have never managed to break the screen, despite some serious abuses... the worst of which involved an LG Shine Plus falling from a 2nd floor balcony, winging off the edge of a swimming pool and into the drink. Remove the battery, let the phone dry out, and it worked fine without having broken the screen (though it was a bit squirrelly for the next year that I used it before replacing it). I'm currently using a One V, and have dropped it a few times without breaking it.
And there's your answer to the insurance question... don't buy a $700 phone. Buy a $200 phone which will give you the same experience as last year's $700 phone, and then you won't be too worried when you drop it, because it's not going to cost you that much to replace, and it'll be cheaper than the insurance on the $700 phone... especially if you plan on replacing it in a year when they come out with the upgraded version anyway. You can probably afford to get it without a contract, and that'll save you money in the long run, too.
Insurance makes a degree of sense(as hard as insurers try to change this) when dealing with situations where risk is either inevitable(ie. your body, with all its potential for horrible and expensive mishaps, comes standard and you'll need one until you die) or a fairly large chunk of your net worth(most homeowning, say) or where your potential to hurt others potentially far exceeds your personal ability to compensate them and insurance is therefore mandated(car insurance on the consumer level, potentially various other flavors among venue operators and the like).
On cheap consumer devices, it just doesn't make much sense. The insurer has to make a profit in order to continue offering the insurance, so you know that(on average) purchasing the insurance is a bad deal compared to self-insuring, and you also know that the potential costs are bounded(ie. there is nothing that could happen to my cellphone that could possibly cost more than a new cellphone. There are plenty of diseases and/or accidents that could happen at any time that could run into an unpredictable but very large number that I don't even necessarily have a good way of estimating).
Just put the price of the insurance wherever you usually put money for storage, let the warranty handle any material defects/abnormal failures, and maybe buy a case if you are a bit of klutz. Unless you murder your phone both brutally and swiftly, you'll probably be able to get a refurb for the money you saved by not buying insurance, plus the deductable you would have paid, by the time your phone eventually does bite it. Worst case, a used or refurbed iphone 4/4S will cost peanuts if you kill your present one and really can't afford a replacement.
Given that, on average, buyers of insurance lose money, you should really only be buying it on things that are at the outer envelope of affordability; but that you must have for one reason or another.
I'll take the possible risk of paying some money over paying up front in case of an accident any day
The mystifying part is a contract smartphone is still like $100/month bill, right? So $200 is pocket change to a smartphone contract victim, its like 2 months service.
I buy insurance for my car because I can't afford a possible million dollar liability settlement out of pocket. Buying $100 of insurance for a $200 loss seems as dumb as buying "oil change insurance" where I could pay only $15/month to avoid the immense expense of paying $30 every quarter for an oil change.
The other part that mystifies be about the story is
I've had the opportunity to file claims with SquareTrade multiple times
My god man, what are you doing? Using your phone as a carpentry hammer? Or the screen as a glass kitchen cutting board? In 15 years I've killed precisely one cellphone, by leaving it in a pants cargo pocket and running it thru the wash. That's $20 down the drain having to buy another new virgin mobile phone.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
AppleCare & AppleCare + are extended warranties NOT insurance. You must be able to bring the old iPhone in for the extended warranty plan. Theft & loss are NOT covered by an extended warranty plan. It is worth noting that AppleCare covers everything that comes in the box & possibly other iPhone related items by Apple (like a dock) that are purchased on the same receipt. Ask at time of purchase. The extended warranty must be purchased at the time that the iPhone is purchased. Otherwise, the iPhone must be checked out by Apple staff in order to qualify for the plan For loss or theft of an iPhone or any smartphone, review your homeowner's or renter's policy or consider getting a renter's policy from your auto insurer. The rates are usually good, Multi-plan discounts will apply Cheers !
Cheers !