Monday, August 15, 2011

Why it's important to put insurance on your $500 phone

Here's the final installment in the "Why it's important to protect your phone," series.
So, let's face it. Insurance on a phone? Sounds stupid, right? There really are some good reasons to get insurance on your phone and there are also some things you should know about and be aware of before you agree to insurance. Read on past the "break" (hehe) for more.

Ask your parents before trying this at home.
To start off, I want to fill you on on the way phone insurance works. Phone insurance, just like regular insurance, has both a monthly cost (a premium) and a cost to get a new phone in the event that you lose your own (a deductible). Each carrier has different premiums they charge for their insurance. There are a few things that you want to ask about before you agree to sign-up for insurance. First, you will want to check out the full price of the phone without a two-year contract. Usually, this is very expensive, but it's an important thing to note. A lot of times, carriers will either charge less for the premium or less for the deductible if the full-price of your phone is less. Also, when you've decided on a phone, you will want to find out how much the deductible is for that specific phone. Most of the time (and this is the case at AT&T) the company will charge you less for phones that cost them less to replace. For example, an iPhone replacement at AT&T will cost you $199 whereas a Samsung Focus (Windows Phone) will cost you $50. In addition to these first things, you also want to know what the insurance covers. I've never heard of an insurance company that covers damage that was caused by you doing something to the phone on purpose (example: "I got so mad at my boyfriend that I just threw it across the room!). Some insurances don't cover lost or stolen and some insurances aren't really insurances at all, they're more like extended warranties.

The bottom line is, make sure you ask; what your insurance covers, what the deductible is, and what the premium is.

Now is time to cover the most common rejections to getting insurance.

Uh.... wow.
The first, and most common, objection that I get is, "I'm so careful with my phone." Well, with each objection, I have a counter story of someone that has come back in and needed the insurance, but never got it. The counter to this is a young lady that went to the YMCA to work out. She left everything in her locked locker in the locker room. Someone used a bolt cutters to cut her lock and proceeded to take her digital camera, iPhone, and car keys out of her purse. She didn't have insurance on her phone and it was only a month old. She had a few options; pay the full price for a new phone, buy a cheap phone to replace hers (and by cheap I mean $180), or sign a two-year contract on another phone line on the account, therefore rendering that person incapable of getting a new phone for two years. She chose the last. I suppose a fourth option would be to go without a phone, but I wouldn't really consider that an "option."

In this case, she was careful with her phone. But your phone's safety doesn't always end up in your hands. The funny thing is, usually the people that say, "I'm really careful with my phone," are the ones who've had flip phones for years. Those things are pretty much indestructible, it's true. But a phone with a glass screen is not. It usually takes one broken phone for them to find that out. On top of it, they're usually the ones who break their phones before the guy who tends to drop it from five-story buildings. Who'd have thought?

If your iPhone 4 accidentally gets microwaved,
it may look like this.
The second objection I get is this: "I have a back-up phone. I'll just switch to that phone if anything happens to this one."  There's a few things wrong with this, but the biggest thing is that you aren't going to want to switch back to that old phone. It sucks. That's why you're getting a new one. If you're getting a new one, chances are it is around two years newer than your old one. In technology, two years is two lifetimes. Phones usually have a shelf-life of about six months before they're gone and written about in history books. To think that you're going to be able to put up with something that is two years old after having the newest thing out there in your hands in ridiculous. Don't get me wrong. I think the idea of a backup phone is great. It is something to hold you over until you can get a new iPhone through the mail after you make your insurance claim. Heck, sometimes it's even fun busting out that old technology. It brings a certain Nostalgia to the table. But after using my old Motorola Razr for an hour, I am ready to throw it through a window. Texting on it makes you want to kick puppies. Even busting out the iPhone 3G is frustrating at best. So don't kid yourself. Backup phones are temporary backups... nothing more.

Only insurance will protect you against this guy. "Will it
blend?" If this guy has anything to say about it... it will.
The next objection I get, and probably the easiest to go against, is, "Insurance costs too much. What if I never use it?" Phone insurance, just like car insurance and medical insurance, is never used in the ideal circumstance. I've literally never used my car insurance, yet I've been paying the premiums for years. Yet, if it wasn't required, I would still have it. The reason is, I know that I can't afford another car in the event that I wreck my old one.

A perfect example of this was when a woman came in and upgraded her phone to the HTC Inspire 4G. She was in to upgrade because she had smashed her iPhone 3GS by dropping it out of a window on the third story of a building. She had also run it over with her car and slammed it in her car door. It was working.... but barely. The outside buttons no longer worked, the speakers didn't work, and the touchscreen worked... kinda. When I told her about the insurance option, and recommended it for her, she declined. I was shocked. I assumed she would jump all over it. After-all, she had thoroughly destroyed her previous phone. I offered it to her again, reminding her of the condition of her previous phone. She declined again. "What!?" I thought to myself. "She must be crazy!" I positioned it again, told her she could take it off in the future if she didn't want it anymore, and pleaded with her to keep it on for at least a month. She accepted.

Two months later, she came in and her phone had been run over by a Semi. The screen was smashed, the phone no longer worked (at all) and she had already ordered her new one through the mail. She was just in to get the contacts transferred from an old phone she had lying around. She thanked me profusely for asking her again and again to get the insurance on her phone. She had avoided a $400 accident.

So to all of you "careful" people out there: if you can afford the full price of the phone that you are buying, then don't get insurance on it. If you can't, you better get insurance... or one of these.


  1. wonderful series. Thank you!

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