Is Phone Insurance Worth It?
By: www.mountainviewcellphones.com 9/14/08
When you get a new phone or upgrade with Sprint, you will be asked whether you want Total Equipment Protection with the phone. As a service center, we of course promote this because we want users to be protected in their investment, but the reality is, we really don’t understand the risk profile of each customer.
First, let’s understand the economics of Sprint’s insurance or service and repair program. Sprint has divided the service criteria into four quadrants for walk in customers. These prices are for walk in customers without insurance. On the X axis, we have damage classifications as “Normal Wear and Tear” and “Physical Damage.” On the Y axis, we have “Phone and Mobile Broadband Cards” and “PDA” devices. My little diagram is below for clarity.
Normal Wear and Tear Physical Damage
Phone & MBC $35 $99
PDA $55 $119
Normal Wear and Tear on devices is considered anything outside of physical damage. Physical damage is considered cracked or broken screen or housing, cracked or separated flip or hinge assemblies, cracked or bleeding LCD, cracked or broken lenses, and/or a broken charging port. In other words, any significant repair is going to cost you $99 or $119 dollars.
However, not included in this chart is that basic software problems with the phone that can be fixed free of charge. These use to be $15 service charges but are now free for all Sprint customers.
I would highly recommend you get the insurance if you are a “high” risk profile. How do you know you are high risk. Here are some questions to ask yourself.
1. Have dogs or other animals that like to play with things you touch?
2. Have little children that take things and drop/throw them or put them in their mouth?
3. Are active outdoors and have the phone on you while outdoors?
4. Are you in a profession requiring you to use the phone while outdoors or on the road? (Sales, construction, mobile technicians, mobile nursing etc…)
5. Have you destroyed many phones in the past? (Left in pocket and went thru washing machine?)
6. Are you prone to losing items? (Frequently leave your personal belongings on airplanes, restaurants, client sites, etc…)
7. Are you a heavy phone user? Use more than 2000 minutes per month?
If you answered “yes” to any of the above, then I would consider you as “high” risk.
If you are high risk, then it makes the greatest sense for you to get the Equipment Replacement Program for the Physical Damage coverage or the Total Equipment Protection program. This is assuming an incident happens to you and you are able to redeem the benefits you have pre-paid for. However, the advantage here is that you the consumer know more about how you treat your phone than the carrier.
For physical damage, the cost with the Equipment Replacement Program is $4/month + $50/deductible. Assuming the replacement cost of a new phone is about $280 the first year, you would save about $226-$184 for the year. Your savings for the 2nd year, if an incident happened would be $102-$68 versus a 1 year upgrade eligible phone. After this point, it becomes a better value proposition to buy a new phone with the upgrade credits provided in the 2nd year.
The Total Equipment Protection program would yield a benefit of $223-$148 in the first year and $43-$7 in the second year.
For a phone that costs more than $280 in value for replacement and you are in a high risk category, it almost always makes sense to get either protection program. All PDA and smartphones fall in this category.
If you were hesitant about spending $7/month, get the $4/month Equipment Replacement program as these are the incidents that cost the most money and pay for walk-in service as needed.