Why you should think twice about getting cell phone insurance

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broken-cell-phoneMany cell phone owners have trouble keeping their phones safe. They’re easy to drop on the ground, fall into water, and nowadays, are very attractive to thiefs.

Is it smart to insure your phone? That depends.

According to a University of Minnesota finance professor, Andy Whitman, probably not.

In a recent interview with a CBS news affiliate in Minnesota, Whitman stated, “From a finance point of view, [cell phone insurance] is a ripoff.”

Whitman thinks that for most smartphone owners — usually customers on a contract with a major cell phone carrier — the $8 to $12 a month they pay for smartphone insurance would be better saved, or perhaps invested. Chances are that there is a high deductible. Some as high as $200.

On the other hand, cell phone insurance may make sense for those users who are prone to losing or breaking their phones — or even worried about theft.

You really need to look at the cost of your phone, how much it would be to replace it. For some, who have expensive phones like the Apple iPhone, it may make sense. But if you own a simple, inexpensive, unlocked feature phone, Whitman may be right. Ultimately, each phone owner should determine themselves if cell phone insurance is for them.

If you do decide to get insurance on your phone, the first thing you should do is to check with your homeowners/renters insurance provider. Some will let you add a rider with zero deductible for far less money then what you would pay per month with a company that specializes in insuring cell phones.

Pure TalkUSA’s research found that State Auto and Auto Owners will allow cell phone insurance for $20 to $35 per year for a $500 phone and zero deductible — much cheaper than most cell phone insurance which usually runs about $120 to $168 per year with a high deductible.

One last thing: If you do decide to get an insurance policy on your phone, be sure to read the fine print.

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