Pros and Cons of Smartphone Insurance. SquareTrade vs Carrier vs AppleCare+. What should I choose?

October 11, 2017
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Smartphone Insurance Comparison

SquareTrade vs Cellular Carrier Insurance Plan vs AppleCare+ vs Credit Card Plans

 

New smartphones are expensive. You will pay over $1,000.00 for an iPhone X.   The cost to repair a broken screen on a Galaxy S8 (without insurance) quoted to me by two different local repair shops was over $350!


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If you are planning on buying a new smartphone and you haven’t purchased insurance in the past it may be worth considering. There are multiple options for phone insurance coverage that offer different levels of protection. We are going to compare the popular cellular carrier insurance plans with SquareTrade protection plan. We’ll also look at some of the cost/benefits of AppleCare+ and Credit Card protection plans.Smartphone Insurance Plan options

Cellular Carriers

Cellular carriers, such as ATT & Verizon, offer phone insurance plans for a fee added to your monthly phone service plan. The insurance plans typically cover loss, theft, damage, malfunction and accidents. When you have a claim your deductible changes based on the age of the phone (ie: how long you have been paying for insurance). The deductible goes down over time (see table below).

In addition to the monthly fee you will pay the deductible for repairs. In my conversation with AT&T they mentioned that they now have a screen repair option that is offered in some service areas for an $89 deductible (bypassing the deductibles listed below).

Many people purchase insurance through their cellular carrier because it is conveniently added to their service contract at the time of phone purchase.

SquareTrade Quotes from StudySquareTrade

SquareTrade was purchased by AllState insurance in January 2017 and has millions of customers. It offers an affordable alternative to traditional insurance for the most common smartphone problems: damage, malfunction and accidents. In addition, SquareTrade focuses on providing excellent service and quick turn around time for repairs at their service centers, through their service partners or through mail in repairs.

Jonathan Kyle, SquareTrade Sr Director of Marketing states:

“At SquareTrade our goal is to give consumers a smarter, more cost-effective way to protect their phones. We have designed a service offering focused on flexibility for our customers that saves them hundreds over carrier options.”  

In my conversation with Jonathon, he stated that SquareTrade tries to do same day repairs and in some cases completes repairs in as little as 30 minutes when onsite at a SquareTrade service center.

I just had a phone screen repair done at a local repair shop and they had my phone for 3 days! No one likes to be without his or her phone for that long.

SquareTrade vs Carrier Insurance Plans

There are some key distinctions between SquareTrade’s protection plan vs a typical insurance plan from cellular carriers like AT&T or Verizon.

Coverage Benefits

A typical cellular carrier insurance plan covers loss, theft, damage, malfunction and accidents.

SquareTrade plan covers damage, malfunction and accidents.

According to SquareTrade, nearly 90% of insurance claims fall under these 3 classifications and that under traditional carrier plans, you may be paying for protection you don’t need.

If you don’t think you are at risk for a loss or stolen phone, you may be overpaying for protection.

Cost & Billing

An average plan from a carrier such as AT&T or Verizon is roughly $9.99 per month. When you stop paying for the service you immediately lose coverage. It is like car insurance. As long as you pay, you have coverage. When you stop paying you lose coverage. On a carrier plan you pay each month on your billing cycle.

The total cost of two years on a cellular carrier insurance plan at $9.99 a month totals $239.76.  Plus you will pay the deductible.

With SquareTrade you pay $129.00 up front for 2 years of protection. For the same coverage time frame SquareTrade is approximately half the cost. Or you can look at it like this; you get two years of protection for the cost of 1 year of a typical cellular carrier insurance plan, however you do not get loss or theft coverage.

In addition, many people forget they are paying for insurance on their monthly cellular data plan. If you have had the same phone for two or three years you have probably paid as much in insurance fees as it would cost to pay for a significant portion of a new phone. Be very careful with recurring monthly payments! I suggest you check your monthly bill and see if you are being charged an insurance fee.

When & Where is Coverage Purchased?

Carrier plans are typically purchased when you buy the phone at the AT&T, Verizon or T-Mobile stores. The additional insurance fee is added to your monthly cellular bill.

SquareTrade service contract can be purchased online at squaretrade.com or at a participating retailer like Costco, Sam’s Club, Target, etc.

SquareTrade protection can be purchased anytime via its website, whereas most carriers require that you purchase the plan when you buy the device.

Transferability

Carrier plans are specific to the phone at time of purchase and the insurance coverage is not transferrable. Because carrier plan deductibles are based on age of phone you get no benefit if you pay for 12 months of insurance then buy a new phone.  Your deductible goes back up with the new phone.

With SquareTrade you can transfer your coverage to any phone you own  during the covered period. For example, if you purchased coverage one year ago and you upgrade your phone, the remaining 12 months of coverage can be transferred to your new phone.

Size of Deductibles

For carrier based insurance plans the deductible decreases over time. AT&T quoted me the following deductibles for an iPhone 8 and a Samsung Galaxy S8:

AT&T iPhone 8 Deductibles

SquareTrade deductibles range from $25 – $99.

 

AppleCare+ vs SquareTrade

AppleCare+ is similar to SquareTrade but adds an additional warranty & support features. AppleCare+ for iPhone extends your warranty from 1 year to 2, and allows up to 2 incidents of accidental damage. A $29 service fee is required for screen damage or $99 for any other damage. It also comes with 24/7 phone or chat support. The cost for AppleCare+ for an iPhone 8 is $129 for two years of coverage. The iPhone 8 Plus is $149 and the iPhone X is $199! Ouch!

AppleCare vs SquareTrade

Like SquareTrade, AppleCare+ does not cover lost or stolen devices. However, according to SquareTrade people are more likely to damage their phone than to lose it.

Credit Card Protection Plans

Many credit cards companies offer some level of protection for devices purchased with the card. Some protection plans provide an additional year of warranty and/or several months of theft or loss protection.  While the benefits may be limited in scope it is free and available if you need it. It is worth checking to see what protection your credit card company offers.

Which option should I choose?

If theft and loss are not your primary concerns, then SquareTrade can save you significant money while still providing excellent service. Compare prices and coverage benefits for your specific phone and personal needs.

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