cell phone insurance under home owner insurance?
August 16, 2010 11:30 AM   Subscribe

Cell phone insurance under home owner insurance? Has anyone tried this? Is it worth it? I signed up for cell phone insurance with Verizon and naively thought it would be worth it (even for a smartphone). Like anything, I know you need to pay something to get something, but $8/mo + $90 for a claim every time could get pretty expensive. If it helps, I have State Farm. We've been with them for 15 years or so.
posted by isoman2kx to Technology (17 answers total) 1 user marked this as a favorite
Claiming a lost cell phone under a homeowner's insurance policy, even if you don't have issues with the deductible, would be the kind of thing that will hurt you in the long run far more than it helps you, homeowner's insurance conventional wisdom says.

Rates and coverage for insurance for small losses like cell phones are never going to be very good, because there's such "moral hazard" related to being careless with a cell phone and it's a small overall loss.

Just be careful with your phone and pay out of pocket if you lose it or damage it is the cost-effective insurance for smart phones or even laptops.
posted by iknowizbirfmark at 11:41 AM on August 16, 2010 [1 favorite]

I made a claim against my Verizon-provided Asurion insurance for a phone I lost (and found years later) My deductible was $50. What was nice is that the new phone did not reset my contract end date and I was able to get my next new phone at that time, rather than two years after the replacement.

If you don't want to pay the insurance fees, why not funnel $8 every month into a savings account and use any proceeds therein to fund a replacement phone? Yes, it sucks if it gets stolen early in the contract but if you never have to use it you just keep the money.
posted by mkb at 11:42 AM on August 16, 2010

Cell phone "insurance" is generally a rip-off for consumers.

And if you think your homeowner's policy will cover your cell phone repairs (or even replacement in a one-off situation, like not part of a larger claim), you are mistaken... your deductible would be (most likely) larger than just buying a new phone.
posted by FergieBelle at 11:43 AM on August 16, 2010

$90 for a claim? You can, in general, buy used phones online for $60-$100, and Verizon will active them with your account information. So unless you plan on losing the phone within the first month, it doesn't seem worth it to me.
posted by muddgirl at 11:43 AM on August 16, 2010 [1 favorite]

I get free insurance for paying my cell phone bill with my credit card (which I then pay off in full at the end of the month). I have a Citibank card, but it's worth checking to see whether whichever card you have offers the same service.
posted by decathecting at 11:43 AM on August 16, 2010

Once you make a claim on your homeowner's insurance, however small, your premiums will very likely go up a not insubstantial amount. You want to use this type of insurance for major damage. Cell phone loss is, relatively speaking, small potatoes.
posted by Blazecock Pileon at 11:51 AM on August 16, 2010

What you are getting from Verizon is total crap.

Why not call your insurance agent and ask if they can give you a personal articles policy on the phone itself? I bet it would be a lot cheaper than insurance from Verizon. I am also with State Farm. I have a separate rider on my Macbook Pro (an item worth $2k) and I pay about $30 a year for full coverage (including accidental damage which Applecare does not cover). Although it is covered under my renters insurance, I'd rather not deal with the a deductible in addition to the unpleasantness of having my laptop being stolen.

Call your insurance agent, tell them the replacement cost of the phone, model # and they will give you a far more competitive rate.
posted by special-k at 12:02 PM on August 16, 2010

PS: Your premium will remain unaffected when you make claims on items that have their own riders. Check with your insurance agent.
posted by special-k at 12:02 PM on August 16, 2010

Insurance is almost always a losing game, as far as expected values are concerned. The only situations where it may be really worth it are when worst-case scenarios would destroy your finances (house, medical, auto injury to others). Cell phone companies offer insurance for the same reason Best Buy sells extended warranties - big profits.
posted by Earl the Polliwog at 12:36 PM on August 16, 2010

Cell phone insurance is only worth it if you expect to break your phone multiple times during the insurance period. This is because the price of the insurance assumes you will only break it once. If you work in an environment where you tend to damage your cell phone it is a great deal. Or if you are like me and have a tendency to drop it constantly :( So if you are a known klutz with your cell phone buy the insurance. Otherwise don't.
posted by An algorithmic dog at 1:07 PM on August 16, 2010

We had the Asurion insurance for my daughter's cell phone. The screen broke and we got the replacement the next day ($50 deductable). They said the insurance also works for lost/stolen phones. I don't have the insurance for mine, since I tend to be very careful with my phones. So, like all insurance, you're placing a bet (against yourself, basically), and you should figure out the odds.

The deductable's a bummer, sure, but we would not have been able to get a good phone for that price.
posted by jasper411 at 1:41 PM on August 16, 2010

Insurance is only worth selling if the expected value of the insurance payouts minus premiums is negative.

So unless your insurance company is run by suckers, that means means that insurance is only worth buying if "expected value" is sufficiently different from "expected utility". Typically, because of the diminishing marginal utility of money, it makes sense to insure against losses which are a large fraction of your net worth. Your house, almost certainly. Your new car, probably. Your phone? Not likely.
posted by roystgnr at 2:17 PM on August 16, 2010

I got a rider on my renter's insurance from state farm for my iphone 4, $800 replacement cost (I included taxes), no deductible, for $30/yr. For that price, I'd have to not lose/break my phone for 27 years for it to be not worth it.

Kind of weird now that I think about it since from an expected value perspective that seems like a pretty bad deal for them. Maybe they cut me a good deal because of the renter's insurance I got from them though.
posted by I like to eat meat at 3:39 PM on August 16, 2010

You seem to be misunderstanding the purpose of insurance.
posted by neuron at 3:59 PM on August 16, 2010

Insurance is only worth selling if the expected value of the insurance payouts minus premiums is negative.

Well, that's not actually true. You also get to hold onto a lot of cash in the meantime which means interest and whatnot.
posted by mkb at 4:00 PM on August 16, 2010

Throw the $8 a month into an envelope and self-insure the phone.
posted by gjc at 8:20 PM on August 16, 2010

You also get to hold onto a lot of cash in the meantime which means interest and whatnot.

If you have the cash, you get interest and whatnot whether you're running an insurance company too or not. The only difference is that if you run an insurance company you need to keep your investments liquid enough and conservative enough to cover big unexpected payouts, both of which reduce the rate of return you can get by investing it in the meanwhile.
posted by roystgnr at 9:31 PM on August 16, 2010

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