Mobile phone insurance versus repairs – how do costs add up?

Ever drop and shatter the screen on your smartphone? Your precious? Your portal of connectivity to all things social? Ever wear out a camera module from addiction to taking pictures of every meal you make, and every cat you encounter?

Back in the days when I was a retail rep for one of the major wireless carriers, it was always a priority to offer mobile insurance with every new or upgraded phone. You know the drill, an extra $7-10 per-month would provide the peace of mind should the unthinkable happen to that mini-computer you just bought. Yes, there was incentive to sell the feature, but by-and-large, the service works with little undue drama should the unthinkable happen, and coverage was immediate.

More than a few times, a customer would reject the offer, and not get across the parking lot before dropping their brand-new flagship on the pavement, effectively destroying the display or causing some other unseen damage. With tears in their eyes, some would beg for an accommodation, an exchange , or a retroactive addition of coverage. Tears would often turn to rage when some customers realized the true cost to replace a broken device (a sad byproduct of subsidized contracts).

Such stories made mobile insurance a compelling offer, but does it really offer the best value for the money? If you crack a screen or need a new battery, might going to a local shop for a repair be a better option? The common concern about going to an onsite repair shop is use of quality replacement components. After all, if you found your smartphone to be suffering from a failing battery, you are not keen on the idea of a replacement unit acquired in a volume close-out discount from the Galaxy Note 7 assembly plant. Ultimately, there is no definitive solution for everyone, but for the majority of consumers out there, the answers may surprise you 

The pros and cons of mobile insurance

Mobile device insurance, like any other, is the type of service you would rather have, and not need, versus need and not have. That is the whole point of insurance in the first place. In that light, mobile insurance, as provided through carriers and a few third-party companies, offers peace-of-mind and convenience. It is the type of service to sign up for, and forget about it, until you need it. When you do need it though, the process is usually as simple as a phone call or making a claim online. Such insurance services also tend to be able to replace the newer devices soonest.

That convenience comes at a cost, however. On average, most programs cost $10 per-month. If nothing breaks, that is $120 spent over a year with no discernable return. What if something does break? Well insurance replacement units are often supplied very quickly, often the next day. However, in addition to monthly premium payments, there is a deductible. Using AT&T’s published schedule, depending on the type of device you have, that deductible can be as little as $12 (for a feature phone or hotspot), or as high as $299 (for a 256GB iPhone 7 Plus). Verizon’s plan has a deductible for the same iPhone at $199. Also, insurance is not generally available for devices that are not sold by the carrier.

The pros and cons of a repair shop

Taking your phone to a third-party repair outfit is not unlike taking your car to a service shop that is not the dealer you purchased it from. Simple online searches can tell you who the good people are, and who to avoid. Taking that variable out of the picture for the moment, upon browsing through any notable repair service, the immediate advantage is cost.

Three of the more recognizable places to take a device in for a repair are uBreakiFix, CPR Cellphone Repair, and Batteries+Bulbs. Between the three, there are variations on how long their repairs are warranted, but the common denominator is many repairs are completed the same day, some while you wait. Moreover, these repair shops can provide onsite diagnostic assessments to actually determine what is wrong with your device – a handy option in lieu of 

That latter is the largest chain, and also has the most price estimates for various repairs published without the need to fill out forms or visit a store. Using the aforementioned iPhone 7 Plus example, and assuming a common issue like a broken screen, a repair at a service location like Batteries+Bulbs would cost about $250, $50 less than the co-pay for insurance through AT&T, but $50 more than through Verizon, not including premiums paid to-date.

Upon any casual browsing of these repair services, the more astute geek will notice phraseology like “top quality parts.” For someone that may seek a service that only uses original manufacturer components, that may pose an obstacle. However, national franchised outfits have no interest in using cheap components only to lose that savings through ongoing warranty repairs down the road. Where that concern turns into a benefit however, is that those who keep their devices for more than a year or two. Also, newer devices are not always eligible for repair due to parts availability. Finally, depending on where you live, there may not be a repair location within a reasonable distance. 

On the following pages, I went in-depth, comparing multiple options, across different generations of a few popular devices, and see how your money is spent – whether it is money well-spent is up to you.

Side-by-side cost comparisons

Through the course of normal events, two of the most common afflictions to our smartphones is a cracked screen, and a jacked-up charging port (often caused while dropping the device while a charging cable is plugged in). I picked the 256GB iPhone 7 Plus (because of the tiered deductibles on AT&T), 128GB iPhone 6s, Samsung Galaxy S7, Samsung Galaxy S6 edge, and compared out of pocket costs for a single claim at 3 months, 9 months, and 15 months using the published insurance rates as offered through AT&T and Verizon, next to the published repair rates on Batteries+Bulbs’ website. While the repair costs will remain constant through each interval example, I think is also serves as a reasonable reference which may help you decide when to possibly use or drop insurance, and go with a repair (or vice-versa).

I used AT&T’s Mobile Protection Pack, which costs $10.99 per-month and the comparable Verizon plan, called Total Mobile Protection, which costs $11.00 per month. The purchase prices or finance costs for the devices were not calculated because those are sunk costs. To its credit, Verizon does offer some onsite repairs, but only for certain devices, and with limited availability. 

About the insurance plans

On the face of it, AT&T’s and Verizon’s plans look the same. Both are managed by Asurion, though they are underwritten by different insurers. Also, while the monthly premiums are the same, the deductibles are not. AT&T’s initial deductible rates are a little higher, but they decrease dramatically if you go 6 months, then 12 months without a claim. The deductibles themselves are tiered based on the type and retail price of the device being insured. Naturally, flagship devices carry a higher deductible.

Fees/Deductibles	AT&T Mobile Protection Pack	Verizon Total Mobile Protection
Monthly Premium	$10.99	$11.00
Deductible range	$12.00 to $299.00	$49.00 to $199.00

While there is some value consideration for AT&T’s tiered deductibles, because they are based on the retail value of the phone and not the components that broke, a broken screen on a 128GB or 256GB iPhone 7 Plus carry different deductibles, even though an actual repair would cost the same. 

That said, the longer you go without a claim, AT&T’s deductibles decrease, whereas Verizon’s remain static. Over time, the out of pocket costs have significantly different cumulative effects. The insurance services offered through Sprint and T-Mobile are similar in scope in terms of costs, deductibles, and they too are also managed by Asurion.