When to Buy Cell Phone InsuranceIn our last post we talked about, “Cell Phone Insurance – Do you need it?”. This post discusses when to Buy Cell Phone Insurance and what situations might justify spending the extra money on cell phone insurance. For the majority of people we believe that cell phone insurance is expensive and not worth the money. The amount of money you  would need to spend to replace it is not a huge amount so why waste money on cell phone insurance?

What Situations Might Require Cell Phone Insurance

Consumers who travel a lot and have a tendency to misplace things might be candidates. Business people who work on construction sites and could easily lose their cell phone. If it is lost on a construction site, it will either be lost in the mud, crushed by something going over it or just disappear down a hole somewhere. If you have a tendency to lay your cell phone down were it could easily disappear you might also want cell phone insurance.

People who get a cell phone through their business and use it for both business needs and personal needs usually can get their cell phones replaced at no charge, provided that it does not become a habit. Most companies have negotiated free cell phone replacements based on the total business that they do with the cell phone providers.  If you are a small business and provide cell phones for people in your company, carrying cell phone insurance is not a good idea either due to the high cost inf insurance. It is easier to split the cost of a replacement with your employee or the cell phone provider than pay for insurance for cell phones.

One additional point we would like to remind people when they are doing these calculations and making a decision is whether the insurance is tax deductible or not. Depending on your tax situation, claiming this insurance as an expense reduces the overall cost of the insurance, which just make it more palatable.

Fine Print Cell Phone Insurance Issues

Always read the fine print in a cell phone insurance coverage package. Will you receive a new phone or a refurbished phone which is essentially a used phone that someone else had? How long will it take to get a new phone to you? Days or weeks? What is the reputation of the insurance provider? Do they have a good reputation for paying on time and / or replacing cell phones quickly?

What is the deductible. If it is $50, which means you pay the first $50. Is it really worthwhile to purchase cell phone insurance? Everyone will feel differently about the answers to these questions and will make up their mines as to whether they want to go ahead with cell phone insurance. We believe that it is just not worth it based on all of these issues.

How Long will You Keep Your Phone

Some consumers like to replace their phones every year. They want the latest and greatest that is on the market. They are willing to pay for the newest phone. These consumers probably would not benefit from cell phone insurance. If they do lose their phone they do not want a replacement with the same phone. They will want another phone that is the newest release and may even change models.

If you keep your phone for a long time it is worth doing a simple calculation.  Calculate how long it would take to pay for your cell phone replacement with your insurance. For example if you purchase another phone it will cost you $150 to replace the phone you have. The insurance is $5 per month, then it is going to cost $150 divided by $5 or 30 months which is 2.5 years.

In other words based on this example, you can afford to purchase a new phone every 2.5 years if you avoid paying the cell phone insurance coverage. Every phone will be different in terms of cost and insurance, so take a moment to do your own calculations to see if it makes sense for your situation.

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