It may sound good, but these policies are often not what you think
updated 1/22/2007 6:58:18 PM ET 2007-01-22T23:58:18
You’ve finally settled on the perfect new cell phone with all the latest features. You’ve chosen the accessories and picked a service plan. Now the salesperson asks if you want to buy insurance to protect your purchase.
It’s only $4.99 a month and you’ll be covered if the phone is lost, drops in the toilet or is run over by a car. So you say yes. Did you make the right decision?
Your new phone comes with a manufacturer’s warranty. But that only covers equipment failure caused by a defect or malfunction. You’re out of luck if the phone is lost, stolen, or accidentally damaged.
Dwight Moore with Verizon Wireless, says customers like
cell phone insurance because they know if something happens to their phone, they’ll quickly have a replacement. In most cases, he says, it will arrive overnight and will be “exactly the same or similar” to the one you had.
Why consumer groups don’t recommend it
“We think it’s almost always a waste of money,” says Consumer Reports Editor-At-Large Greg Daugherty.
“You can insure every gadget in your life if you want these days,” Daugherty says. “We think all this little insurance is just adding up to too much in many cases. People really ought to be focusing on the big risks.”
San Diego’s Utility Consumers’ Action Network (UCAN) also advises most consumers to skip cell phone insurance. UCAN’s Michael Shames tells me they get “lots of complaints” from people who did buy this coverage.