Protecting your Phone

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Cell Phone Insurance

When signing up for service, you will likely be presented with an option to insure your phone. Whether or not to buy this insurance is a tough decision — one made even more difficult with two-year contracts now standard, meaning there is a much longer period during which your phone could be lost, stolen, or damaged.

Before you commit to insurance, here are some questions you should get answers to:

• How much is the monthly or annual premium?
• Do I have to enroll at the time I get service, or can I do it later on?
• Can I cancel coverage at any time?
• Is there a waiting period before coverage starts?
• What does the policy cover? (Most cover loss, theft, or accidental damage; in some cases you can pay more for an extended warranty.)
• How much is the deductible? (Usually it is $50, but on more expensive phones it may be more.)
• In a claim, will I get a new phone or a refurbished one?
• What happens if my particular model is not available?
• Is there a maximum claim?
• Are there a maximum number of claims per year?
• What hurdles do I have to go through to file a claim? (You may need to file a police report.)

Is Insurance a Good Idea? There's no clear-cut answer to that question. What you may want to do is take a look at the replacement cost for the phone you are buying and compare that to what you will pay in insurance premiums. Of course, one never knows when or if a phone will be lost or stolen. If you have a $50 deductible and are paying $5 a month in premiums, you'll have paid $110 for a replacement if you lose it after a year and $140 after 18 months.

On average, insurance probably makes most sense if you have a high-end phone, like a PDA, and you would want to replace it with the same thing if something happened to it. If you have an entry-level phone, or would be okay replacing your expensive phone with an entry-level phone, then you can probably skip the insurance. Of course, like all insurance, it ultimately depends on your risk tolerance.

TIP: If you lose an expensive phone and don't have insurance, one option is to terminate your contract and sign up with a new provider. You'll get hit with a cancellation penalty, of course, but this might be more palatable than paying up to $600 for a new PDA.

Insurance or not, if your cell phone is lost or stolen, contact your carrier to suspend your service. They will turn off the phone's ability to access its network, preventing unauthorized calls. Once you get a replacement phone, your carrier can activate your number again. You are responsible for all calls and activity from your phone, so report the loss as quickly as possible to minimize your exposure to unauthorized charges.

Phone Warranty

Most cell phones purchased new from a carrier or its authorized agents come with a one-year manufacturer's warranty. If the phone is defective out of the box, or shortly thereafter, return it to the point of purchase for a replacement. (Make sure you keep the phone box and accompanying materials until you are sure the phone is in good working order.) If there is a problem with the phone after the initial period, contact your carrier for warranty service. Note that Sprint requires enrollment in its “Equipment Service & Repair Program,” which carries a monthly charge, to get repair service during the first year.