Four surprising things about cell phone insurance

Cell phone insurance may not be as good a deal as you might think. Here are four things to consider when choosing a cell phone insurance payment.

You dropped your cell phone (again). And this time, it was into a pool.

Thankfully, you opted for cell phone insurance — but how much do you really know about your plan?

You’re probably aware that policies cover lost, stolen or damaged phones. What you might not know, however, could fill a book — and it would be a shocking read. Consider this the Cliff’s Notes.

1. Your deductible could equal the amount you paid for your phone.

Right now, you can buy a new iPhone 6S with a two-year contract from Sprint for $199.99. To insure it, you might sign up for Sprint’s Total Equipment Protection, which costs $11 per month. But break that shiny new phone, and your insurance deductible will be $200.

That’s because carriers heavily subsidize cell phone prices when you sign a contract. The retail price for an iPhone 6S is nearly $650. Installment plans, which often require no upfront payment for the phone, simply spread its cost out over your contract term.

2. You don’t have to buy insurance from your carrier.

Wireless carriers are in the business of selling phones, not insuring them. For that, they rely on a third party, typically a company called Asurion. So if you’re looking to switch carriers because of a bad claims experience, know that you’ll likely be dealing with the same insurer elsewhere.

But you usually don’t have to get insurance through your carrier. Companies like SquareTrade will cover your device against damage and defects for a fraction of what carriers typically charge.

3. You have little control over your replacement.

If you make a claim, your insurance company will try to give you a replacement of the same make and model — but they don’t have to. So your new phone could be a different color or type. It might not even be new.

“To be able to get the customer back in the same make and model, we use a mix of both new and refurbished phones to ensure adequate inventory is available,” says Bettie Colombo, a spokesperson for Asurion.

4. You can get dropped from your plan for making a claim.

Most insurance providers cap your claims at two in a 12-month time frame. This can be a problem for the particularly accident-prone. The trouble is, those are the people for whom cell phone insurance makes the most sense.

If you’re rough with your phone, cell phone insurance is a wise investment. But more than half of American adults have never broken or lost a cell phone, according to a recent study by Verizon.

If you’re among them, keep in mind that you could spend hundreds in premiums over two years and never make a claim — and if you do, the deductible could be as high as $200 for a top-tier smartphone.

Cell phone protection plans by carrier

These basic insurance options from the Big Four carriers cover lost, stolen or damaged phones. They don’t cover phone malfunctions, but carriers often offer extended warranties packaged with insurance. Customers are typically limited to two claims in a 12-month period.

	Monthly fee	Deductible
AT&T	$7.99	$50-$199, depending on device. Could drop by 25% to 50% with the company’s declining deductible program.
Sprint	$9-$11	$50-$200, depending on device.
T-Mobile	$10	$20-$175
Verizon	$7.15 for smartphones, $5 for basic phones, tablets	$99-$199 for smartphones, $49-$199 for basic phones, tablets.

Other coverage options

	Cost	Covers	Deductible
AppleCare+	$99-$129 for two years of coverage.	Damage (two incidents) and phone malfunctions.	$79 or $99 per incident, depending on model.
SquareTrade	$119 for two years of coverage.	Damage and phone malfunctions.	$99 for all claims.

Kelsey Sheehy is a staff writer at NerdWallet, a personal finance website. Email:ksheehy@nerdwallet.com. Twitter: @KelseyLSheehy.

This article was written by NerdWallet and was originally published by USA Today.