It’s amazing how difficult it is to go about everyday life without a piece of fragile glass and expensive electronics in your pocket. A drop, one stumble, a careless spill, and you lose hundreds of dollars. This is why gadget insurance is such a big industry. But is it worth insuring your gear?
Not all insurance is good. If you’re not careful, you may end up paying a few dollars a month for a policy that doesn’t cover what you thought it would. Let’s take a look at what you should check before you decide whether to insure your tech gear.
Fine Print in Contracts Might Mean Different Than What You Think
Insurance is one of those things where you need to check the documents you sign. Checking the “I’ve read the Terms of Service” box without checking everything is a bad idea. While you may think you have insured your device against accidental loss, theft, and damage, insurance companies may have a different understanding of what these words mean.
Let’s use the $8.99 AT&T Cellular Insurance plan as an example. It offers “Protection against loss, theft, damage and out of warranty malfunctions”. That seems pretty standard but remember, other insurance offers will be different.
Digging deeper, in the IB section, the Coverage Plan, what is covered is better defined.
[AT&T] covers your Insured Property for the following causes of loss.
i) Physical damage.
ii) Theft or loss due to mysterious disappearance or accidental loss of permanent ownership.
iii) Mechanical or Electrical Failure.
Apart from the odd capitalization on the last point, so far, very good. The next section indicates that they don’t cover your uninsured items, data, or accessories and that your plan must be paid for in full to claim benefits.
Part II. describes Exceptions. This is usually the most important part to check because it adds warnings to things like loss or theft. For example, if your phone is damaged by nuclear radiation (O.), war (P.), or government action (Q.), it is not covered.
Some situations are more likely to be excluded.
B. Losses due to willful separation from Covered Property by you or anyone entrusted with Covered Property.
C. Loss due to a willful, dishonest, fraudulent, or criminal act by you or a member of your family…
Depending on how strictly the insurance company decides to enforce these requirements, things like leaving your phone on a cafe counter while you’re running to the toilet can be considered “intentional goodbyes” and, if your phone is lost while you’re away, you could be left exposed. Similarly, if the person who stole your phone is your useless relative, you might as well be unprotected.
The cellphone was accidentally split.
Overall, AT&T’s policies seem to protect you from what you think it’s doing. There doesn’t seem to be anything here that might trip you up. If your phone is lost, stolen, or damaged, you’re likely to be fine.
So let’s take a look at the policies that list some terms that could trip you up. I will use my camera insurance policy. This is a professional policy and I pay around €500 ($600) a year for it. I’m protected from “theft”, but that comes with a few caveats.
For my camera to be protected against theft, it must be in my “private custody” or “in a securely locked building, hotel/motel room or hotel/motel safe, and the theft or attempted theft involves entering or leaving the building, room a safe hotel/motel or hotel/motel by force and violence.” If I leave my apartment unlocked and someone takes my camera, I’m not protected.
Similarly, if my equipment is left unattended in my car:
- My gear needs to be kept out of sight in the trunk or “locked luggage compartment”.
- The car must be locked with “all safety safeguards … in full and effective operation”.
- All windows must be left closed.
And even if all of those conditions are met, it doesn’t take effect between 9 pm and 6 am.
This is not an unreasonable term. The insurance company just made it clear that I must look after my equipment and take reasonable precautions to protect it. However, if I hadn’t read the policy, I wouldn’t have known about the 9 pm to 6 am vehicle exception.
You Must File a Claim Using the Official Process
Most insurance policies have a section where that lists your liability in the event of loss or theft. Again, they aren’t too burdensome, but you have to make sure you do. Back to AT&T policies. Section VI outlines your tasks. The four most important terms are:
A. If your Covered Property is lost or stolen, you must notify your wireless service provider as soon as possible to suspend service.
B. If the claim involves a breach of law or loss of ownership, you agree to immediately notify the law enforcement agency with jurisdiction and obtain confirmation for this notification.
C. You must immediately report the Loss to our Authorized Representative no later than sixty days from the Loss Date…
F. If the cause of the Loss is not loss or theft, you must retain the Covered Property until your claim is resolved…
All this means that to make a claim, you must contact your carrier immediately; that if your phone is stolen you must report it to the police, and if not, you must keep it; and you cannot file a claim for six months later.
Deductibles Can Be Huge If Your Device Is Lost or Stolen
Almost all insurance policies have a deductible. This is the amount you have to pay each time you claim in addition to the monthly fee. In general, the lower the monthly amount, the higher the deductible. Even plans that boast that they are non-deductible, often have a mandatory administration fee for each claim.
The problem with deductibles is that they can be very high. Say you buy an iPhone X and insure it with an AT&T Cellular Insurance policy for $8.99/month. Throughout your two-year contract, you will pay $215.76 for insurance. Reasonable. However, if your phone is stolen and you need to file a claim, you will have to pay between $149 and $299 for the deductible. For screen repairs, the deductible is only $49.
If your phone tends to get lost or damaged, this may still be a good thing. But $300 is not a small amount to pay all at once. Lose your phone and break one screen, and suddenly your insurance policy costs you about $500 for the year. You might be better off with a cheaper phone or at least learn how to take better care of the one you have.
Should You Insure Your Tech Gear?
I didn’t insure my iPhone because I’ve never lost my phone and only damaged one screen. It’s not worth it to me. If you’re good at using your phone and don’t lose it or break it, the numbers won’t add up.
On the other hand, if you break your stuff a lot, you might be better off with something like AppleCare+. You get cheap repairs and they cost less than most insurance plans. It’s also included in the iPhone Upgrade Program.
Insurance only works for people who have lost their belongings or for items that are very expensive to replace — like your home. If you can’t get a night out without losing your iPhone, then insurance might be for you. You’ll end up paying a lot of money with the deductible, but you’ll probably end up getting out a bit first.
