iPhone Insurance

Early in 2010, AT&T announced that they would offer an insurance plan to cover all new iPhones.  The plan would cost you $11.99 per month, and must be signed within 30 days of purchasing a new iPhone.  The announcement was great news to iPhone owners who have been dismayed by the lack of an insurance option for their devices.  To me, this proclamation lost its shimmer once I thought about what a bad deal this is.

First, let’s talk about what insurance really is.  It is peace of mind, simply put.  You agree to pay money to a company and receive no product or service in return.  All you receive is a promise that the insurer will pay in the event of a loss.  Often times, the losses can be enormous (e.g., a flood, sudden death or home fire).  Yet, because these events are statistically unlikely to happen and the insurance companies know it, the cost of such peace of mind comes at a low enough cost to be a good value.

What if some sort of loss occurs more frequently (a cracked iPhone screen or an auto accident by a teenager, for instance)?  What does an insurance company do to account for that?  Well, they price the premiums higher because there is a higher likelihood that a loss will occur.  If the insurance company does not price the premiums high enough, the insurance company will go out of business.

So, how much does peace of mind cost for a $600 or $700 iPhone that break more often and cost more than many other smart-phones?  Well, it’s a price that I don’t believe is a good bargain.  First of all, at $11.99, the premiums alone are $287.76 for the duration of a two-year contract.  In addition, if you have a iPhone 4 with any size memory or an iPhone 3Gs with memory over 16GB, you must pay a deductible of $199 to replace your damaged device before you can get a replacement.  That added together is $486.76.  That’s a huge amount of money to insure a phone that costs $700 for the most expensive 4th Generation iPhone on the market and $600 for the next model down.  3Gs iPhones cost even less to replace.

Why not, instead of paying such a high premium for insurance, take advantage of iFixYouri?  You can fix a cracked 4th Generation iPhone screen for $109.  We even sell fully refurbished iPhone 3G’s for $149.  And you saved $11.99 a month.

The bottom line is that before you let yourself get talked into insurance by a sales representative, make sure this peace of mind is worth the cost according to your own lifestyle.  Measure the cost against the risk.  The sales rep gets commissions for selling insurance and will always recommend it.  They do not repair the devices and therefore does not make any money if customers know they can get their phone repaired elsewhere.  The price of the monthly premium adds up and if you are a person who typically doesn’t break electronics or lose things, then your money is wasted.