The deals can be enticing: get the latest phone for cheap, if you sign up for a plan. But it is easy to overcommit yourself, leaving you stranded if your phone breaks. We have put together some key things you should know about warranty, extended warranty, and insurance, and how to evaluate whether the latest “deal” offered by your carrier is really worth it.
It sounds great: the latest iPhone for just over $8/month. You just need to have an eligible trade-in and sign up for 36 months. That adds up to $300 total - much cheaper than the over $1’000 price tag at the Apple store.
However, the phone is attached to a $75/month cell phone plan over the same 36-month period and the trade-in value is only confirmed after you have already signed up. So there are a couple of things that can make this deal quite expensive:
If your trade-in is not accepted (it’s not in “good working condition” or a lower-valued model), your monthly phone rate will jump from $8 to over $30 for the deal we looked at for this example, totaling over $1000 over 36 months.
If you break your phone within warranty, you will have to pay up to $99 per incident out of pocket to have it fixed.
If you break your phone out of warranty, a simple screen repair can cost you over $300.
If you lose your phone, it gets stolen or suffers any damage not covered under the warranty, and you do not have insurance, you continue to pay the agreed monthly fee for the remainder of the 36 months, and have to get a new phone without having an old one for trade-in credit.
If you want to change your phone, you have to wait for an eligible offer from your carrier or pay extra, while continuing to pay for the remainder of the 36 months (keep in mind that most people change their phone after 2-3 years).
Of course, that does not automatically mean that you need to get insurance, but if you tend to be clumsy and maybe have had to replace a broken screen before, or if buying a replacement phone would be a financial struggle, getting insurance might be something to consider.
The difference between warranty, extended warranty and insurance
Warranty covers anything that is the result of a manufacturing defect. That means, if you drop your device or you use the wrong adapter to charge it, the damage is on you. To make a claim against the device’s warranty, you usually need to have the purchase receipt (that is where Savvee can help you - by keeping them all in one place). If you bought it used, you are often out of luck, even if the device was still within its original warranty period.
While manufacturer warranties for phones often cover twelve months, many give you the option to purchase an extended warranty that allows you to get your device fixed beyond the first twelve months. Upgrading to an extended warranty often covers you for more than manufacturer errors and includes accidental damage protection (make sure to read the fine print). However, if you lose your phone or it gets stolen, it will generally not help you.
Insurance is the way to go if you want all-around coverage. Whether you drop a device or it gets stolen, the insurance will kick in. How exactly depends on the plan. Many have deductibles (they apply to some of the warranty repairs as well), and there is a direct trade-off between premiums (lower) and deductibles (higher). With insurance, you again have multiple types to choose from:
Check your renters or home insurance: it might already cover your phone. Check with your insurance provider to make sure it is included and the sum insured is up to date. This can be an affordable option, but keep in mind that claims you make for your phone could impact your premium at renewal for the entire policy. Therefore, if you expect multiple claims, a separate policy might be worth it.
Buy it from your carrier: most offer some type of insurance, but make sure you compare their offer to other providers. Get the offer from your carrier and then shop around before committing to anything.
Buy dedicated insurance, just for your phone: you can get an overview of a couple of providers here. Remember to shop around. If an insurance agent calls you after creating an offer, take it as an opportunity to negotiate a cheaper premium or lower deductible for yourself.
Our recommendations in a nutshell:
If you can not afford to buy a new phone, you probably can not afford the 36-month plan: save up first and buy your phone outright (opt for a refurbished option from the manufacturer and check trade-in deals to save money).
Warranty alone is not enough: get the extended warranty or insurance that best fits your needs.
Cover your phone with more than insurance: a good case can prevent damages and may add some convenient features to your phone. Read more on this in our blog post here.
Savvee wants you to get the most out of your things, and the right insurance cover can help you achieve that outcome for your phone. Download our app for iOS or Android now and start getting more value from your things.
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