When it comes to insurance products, extended warranties are the black sheep of the family, regularly derided by consumer advocates as too expensive for the protection they provide.
Still, there’s an allure, especially for the risk-averse consumer and especially for the gorgeous new smartphones: the iPhone 6, Galaxy S5, et al.
Should you buy an extended warranty for the pricey new computer that you pull out of your pocket dozens of times per day? Do smartphones’ new features and bigger screens change the answer to that question?
Ultimately, the answer will depend on which arguments resonate with you. Here’s what to consider:
Just say no
A simple, blanket answer to the warranty question is to avoid them. Says Consumer Reports: “Pass on phone insurance, which runs about $7 to $11 a month, or up to $264 over two years.” It said 1 in 5 respondents in its survey had to replace a lost, broken or stolen phone, “so you probably won’t collect. If you do, you’ll face a deductible of up to $200, and the replacement may be a refurbished model.”
So that hangs out the dirty laundry of phone warranties, but it doesn’t address the details and options. For example, some warranties cost less per month and have far lower deductibles. And some might think a 20 percent chance of needing the warranty actually seems pretty high.
Just say no, Part II
The golden rule of insurance is that you don’t insure against little things, just financial disaster. But you might already have insurance coverage for your phone. Here is where to check:
Credit card coverage: Many credit cards will extend a manufacturer’s warranty for free if the card is used to purchase the device. Some might provide theft protection, and a few provide accidental damage if you use the card to pay your monthly wireless bill. It’s worth checking on the benefits of your cards.
Homeowners: Check to determine whether your existing homeowners or renters insurance covers electronics, or whether you can get a personal articles policy to cover the phone.
Retailer and manufacturer warranties: Smartphones are quite reliable, and if you have a defect, you’re likely to discover it quickly, when it’s already covered by the retailer return policy and manufacturer warranty.
Plan B: Get the warranty — your way
Phones are pricey. While you might have paid only $200 or $300 for your phone, its true cost is more like $600 to nearly $1,000, something some consumers learn only when they go to replace a damaged or lost smartphone and they’re still under contract with a plan that subsidized the cost of the now-broken phone.
Don’t be pressured. It might surprise some buyers that you don’t need to buy a warranty at the exact moment you purchase the phone — although it won’t be covered until you do, and some require a warranty purchase within 30 or 60 days of buying the phone.
Comparing offerings. The primary venues for extended phone warranties are from wireless carriers, third-party warranty companies and retailers that sell phones.
Or, get the warranty but pay monthly. If you’re hesitant to make a big upfront commitment to a warranty, pay monthly to protect your phone when it’s brand new. That way you can insure the phone during the most expensive period of its life — before used ones are widely available for sale. You can cancel the warranty when you feel you don’t need coverage anymore.
Either way, before you buy a warranty, check details on how you would receive a new phone or get your old one repaired. Some services, such as SquareTrade, offer the option of replacing the phone overnight or going to a repair shop, including an Apple Genius Bar for iPhones, and the service will reimburse you.
Gregory Karp, the author of “Living Rich by Spending Smart,” writes for the Chicago Tribune. Readers may send him email at gkarptribune.com.
Warranty options
Reviewers generally favor AppleCare+ for iPhones and SquareTrade for many types of electronics.
Reviewers in general do not highly rate warranties offered by wireless carriers, such as Verizon Wireless or AT&T. The warranties tend to be expensive, about $10 per month, and have huge deductibles. Both those carriers, for example, charge a $199 deductible per claim. So if you break your phone 12 months after you bought it, you will have paid about $320 to get it replaced or repaired, maybe more than if you had it repaired on your own.
Check the fine print. Under some plans, you might get a refurbished phone as a replacement instead of a new one.
The big plus of wireless carrier plans is that they usually cover loss and theft, while many others do not.
Third-party warranties, from the likes of SquareTrade and Protect Your Bubble, are less expensive than wireless carrier plans, both monthly premiums and deductibles. For example, SquareTrade’s monthly cost for an iPhone 6 is $5 per month or $99 for two years, with a $75 deductible if you make a claim. Protect Your Bubble is about $6 per month with a $50 deductible.
Extended warranties offered by retailers come in widely different types, with some more like the wireless carriers, while others offer the SquareTrade brand.
— Gregory Karp, Chicago Tribune
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