Find out whether a carrier plan is worth the monthly premium.

By Dory Devlin
Updated January 20, 2009
Cell phones in gift boxes
Credit: Jonny Valiant

Should you pay for insurance in case that phone is lost or damaged? Paying a $5 (or so) monthly premium may make sense if you or your teens are accident-prone or if you paid several hundred dollars for a phone. But if you do opt for a carrier insurance plan, read all the fine print. Here’s why.

  • The replacement phone may not be what you want. You will probably not be able to replace your handset with a new version of it. “If you lose your old Razr, you aren’t going to get a new iPhone as a replacement. You’ll probably get an old, used Razr,” says Christopher Null, who writes about technology on Yahoo! Tech. Noah Kravitz of PhoneDog notes that in his experience, refurbished cell phones, which have been repaired and resold, “tend to have a bad reliability record,” worse than that of refurbished computers and other consumer electronics.
  • You may need to pay a deductible. On top of the $5 a month you have paid toward insurance, you may be required to pay a deductible of $50 to $150 to get a refurbished replacement phone. “You’re better off just buying a used phone if you need a quick replacement or, depending on the terms of your agreement, possibly even canceling your old plan and signing up for a new one to get a new, subsidized phone,” says Null. Do the math. This may be the cheaper solution.
  • Warranties typically do not cover lost or stolen phones. Most phones come with an automatic one-year manufacturer¹s warranty that covers only defects not caused by negligence on your part. It’s a good idea to keep your original receipt and packaging in case you need to send the phone back to the manufacturer. It may take up to 60 days to receive a replacement phone.