Are protection plans worth it?

Shayne Jacopian | October 23, 2017

When you’re examining the details of your wireless bill and determining which monthly charges are unnecessary, one feature that you should consider eliminating is your month-to-month smartphone “protection plan.”

Just as wireless providers market unlimited plans as the “safe” choice for avoiding overage charges and throttling, they also sell month-to-month protection plans like hotcakes to customers looking for peace of mind, and who are willing to pay for it. And, just as most unlimited plans don’t actually help you avoid throttling, most smartphone protection plans have several catches to them, as well.

Protection Plan Fun Fact:

More than half (51%) of Americans have never lost or broken a phone!

For one thing, protection plans often are redundant. Wells Fargo and Chase both offer several credit cards that already include cell phone protection plans with your card. So, if you’ve got one of those cards, there’s no way that a protection plan is worth it. Still, even if you don’t, you have to do the math:

If you read the fine print of T-Mobile’s protection plan, for instance, you’ll find that even though they charge as much as $15 per month for smartphone insurance, they place a lot of limitations on your ability to actually use that insurance. From the bottom of T-Mobile’s Premium Device Protection page, magnified from its native 8.5-point font:

“Max of 2 approved loss, theft or accidental damage claims within a 12‐month period, subject to your service fee/deductible of up to $175 per approved claim. $5 processing fee may apply for approved mechanical breakdown claims. $1,500 per claim limit applies.”

Wireless Protection Plan

40% of iPhone protection plan claims used to be attributable to water damage, but every iPhone since the iPhone 7 has been water resistant.

The other major carriers, Verizon, Sprint, and AT&T, have similar policies, with claim limits to the value and frequency of claims allowed and deductibles of up to around $200.

Using T-Mobile as an example, let’s say you lose or break your phone once per year. At $15 monthly to protect your device, you’re paying $180 per year. When you make a claim, you’ll be asked to fork over another $175 before they give you a new phone. Or, rather, a refurbished one, if there’s any way they can avoid giving you a new one.

Let’s say you break a 64GB iPhone 6s. I checked out some reconditioned iPhones sold on T-Mobile’s own website, and found that a pre-owned 64GB iPhone 6s goes for $552. In the worst-case scenario, you’ll have to pay for $355 of that, meaning that in exchange for the $180 you pay in a year for device protection, you’re saving a whopping $197 if you actually lose or break your phone.

Now, we believe that savings is savings, but is $17 of potential savings really worth gambling $180? Not when the manufacturer of your phone will replace a broken screen for only $129, it’s not!

The AT&T Mobile Protection Pack is no different when it comes to replacing your phone:

“Claims may be fulfilled with new, or AT&T Certified Restored equipment of the same or other models of like kind and quality. AT&T Certified Restored is previously opened and/or used equipment (which may be refurbished or remanufactured and may contain original or non-original replacement parts). […] Colors, features, and accessory compatibility are not guaranteed.” 

So not only is AT&T going to give you a refurbished device if they can help it, but they’re not even going to guarantee that it will be the same model, have the same features, or be compatible with accessories that you’ve already purchased!

Sounds like a bad deal to us.

Of course, we wouldn’t be doing our jobs if we didn’t point out that sometimes, device protection is a smart choice. For instance, wireless protection plans from AT&T, Verizon, and T-Mobile do make sense if you make the maximum number of claims per year. So if you have a toddler who likes throwing stuff into the toilet, or if your fingers are literally sticks of warm butter, then maybe it’s not such a bad idea after all.

But if you’re like most people, it’s probably not worth it. Here’s our advice: stick that $15 per month under your mattress. If you lose or break your phone, then you’re ultimately out $17. If you don’t break your phone, keep sticking that money under your mattress. Keep it up for 5 years, and you’ll be able to buy a brand new mattress so you can sleep soundly knowing that your wireless provider isn’t profiting off of your need for peace of mind.

Want to save even more on your wireless bill?

We negotiate for you to get you a better price on your monthly bills. You can even keep your protection plan—we save you up to 30% without changing your services.

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