Smartphone Protection Plans and Warranties

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Smartphone Warranties and Protection Plans

There are no studies or reports in the public domain listing the common reasons why people choose to add warranty/insurance/protection to their smartphone. Instead, reports by Asurion, Consumer Reports, Gizmodo, TechRadar, and others highlight the importance of adding a warranty/insurance/protection plan to a smartphone. From these reports, likely reasons were identified as to why people add a warranty/insurance/protection plan to their smartphone that include cost of the device, the probability of a potential damage, considering the warranty a smartphone comes with, the cost of an insurance plan over a long period, and what a plan covers. On the other hand, reports by LifeWire and Fortune revealed that adding smartphone insurance was not important for reasons such as monthly cost additions, repairs still requiring extra payments, poor customer service, and others.

Likely reasons Why People add a Smartphone Insurance Plan

1. The Cost of the device

  • According to Gizmodo's report, the cost of a device or the price of replacing it entirely is a significant determining factor for people to consider the addition of a warranty/insurance/protection plan to their smartphone.
  • WhistleOut's report observed that higher the cost of a device, more likely are the people to consider adding a warranty/insurance/protection plan to protect it from damages, as buying a new device may not be immediately feasible.

2. The probability of a potential damage

  • A survey of over 5,200 smartphone users by Consumer Reports revealed that about 50% of respondents have experienced at least one smartphone fiasco in the previous 24 months, indicating that people choose to add a warranty/insurance/protection plan if they feel they would likely witness such a situation while using another smartphone.
  • Consumer Reports' study found that 81% of smartphone users, with children of 12 years or younger, lost at least one phone over the past two years. The study highlighted that such situations prompt people to consider adding a warranty/insurance/protection plan to their smartphone to avoid damage, theft, or loss.
  • As per a report by Tom's Guide, about 35% of users break or damage their smartphone within the first year. This information indicates that a good number of people consider adding a smartphone insurance plan to cover such unforeseen circumstances.
  • Asurion's report revealed that people lose up to 80 million phones at a rate of 2.5 devices per second every year due to theft or damages. The report highlighted that a warranty/insurance/protection plan covers everything from accidents to thefts. The study shows that people would likely choose to add a warranty/insurance/protection plan to avoid the costly impact of such situations.

3. Considering the warranty a smartphone Already comes with

  • The one-year limited warranty that smartphones come with cover hardware malfunction and manufacturing defects. This plays a significant role in whether people would choose to add extra insurance plan to their smartphone. According to a report by WhistleOut, people who only intend to include things such as accidental damage, third-party damages, and others would opt in for a warranty/insurance/protection plan.
  • As per WhistleOut's report, some credit cards provide extended warranty for the smartphones that have been purchased on the cards, indicating that people in this category (with credit cards) would most likely add a warranty/insurance/protection plan if the extended warranty they get from their credit cards is still not sufficient.

4. The cost of an insurance plan over a long period

  • According to Consumer Reports, buying a new Apple or Samsung smartphone due to severe damage could range from $840 to $1,149, but with monthly insurance premiums, it can go as low as $7 to $36, people would likely choose to add a warranty/insurance/protection plan to their smartphone.
  • Due to the cost of repairing the broken screen of a smartphone out of an insurance plan being in the region of $129 to $279, people most likely choose to add a warranty/insurance/protection plan to their smartphone to make taking care of such of incidents less burdensome, as per a report by Tom's Guide.

5. What a warranty/insurance/protection plan covers

  • As per WhistleOut's report, people would choose to add a warranty/insurance/protection plan to their smartphone if what it covers is more reasonable compared to what they would pay outright for damages or theft.
  • Smartphones users still have to pay to repair their devices despite having an insurance plan with some providers, meaning people would most likely consider adding a warranty/insurance/protection plan to their smartphone if it gives them 100% coverage, according to a report by WhistleOut.

Cons of Adding a Smartphone Insurance plan

  • According to an article published by Fortune, consumer advocates claim that smartphone users should skip purchasing costly insurance plans provided by various mobile carriers like Verizon. It was found that not only are the costs of the protection plans high, but smartphone users will notice that their benefits of replacing or repairing phones are decreased by quality issues, deductibles, and many other loopholes.
  • In some cases such as the Verizon's equipment protection plan, replacing a particular model will not likely be a new phone but will rather be "a used model that's been refurbished". There have also been reports from some consumers claiming that their replacement phones from certain firms did not work as expected.
  • According to an article published by Lifewire, there are various reasons why consumers should opt out of purchasing insurance or protection plans for their iPhones. The reasons include increased monthly costs, payment for repairs, refurbished phones provided in case of replacement, poor customer service, a limited number of claims, and no technical support.
    • iPhone users who opt for insurance plans would have to pay a monthly fee similar to traditional insurance plans for cars or houses. iPhone users would be spending more money every month, which when added up can total anywhere from $100 to $250 for two years of protection/insurance premiums.
    • Similar to traditional insurance plans, insurance plans for iPhones involves making a payment when a claim is made. The owner would have to pay a certain amount for repairs or for a replacement. It has been found that deductibles can cost between $25 to $300 per claim.
    • Most often insurance companies provide used phones that are just refurbished instead of providing a brand new iPhone when a replacement claim is made. For premiums and deductibles that cost hundreds of dollars, it is far from satisfactory to have a used phone than a new one.
    • Many iPhone users have received poor customer service and have complained about lost paperwork, rude employees, and delays in getting their replacement phones from their insurance providers. It has been found that iPhone insurance category has obtained the lowest scores from consumers compared to any other iPhone-related products.
    • There are certain iPhone insurance plans that have limits on the number of claims a user can make in a one or two-year policy term. For example, certain iPhone insurance plans allow only "two claims in a two-year policy".

Research Strategy:

To identify common reasons why people add warranty/insurance/protection to their smartphone purchase, we started by examining research portals in search of reports of customer surveys or independent studies revealing the common reasons why people add insurance/protection/warranty when buying smartphones. For this, we investigated directories such as eMarketer, Gartner, Gallup, and others. This research path produced surveys by Gartner revealing the rise of smartphone purchases, reports by Gallup noting that people are increasingly unable to stay without their smartphones, and other general information not related to the subject of insurance plans for smartphones. An exhaustive search through these channels provided no information listing the common reasons why people added a warranty, insurance, or protection plan to their smartphones or the cons for adding a plan. We then extended our search to include trusted technology and media directories such as TechRadar, Forbes, Customer Reports, HuffPost, and others in search of reports with insights into reasons why customers added a warranty, insurance, or protection plan to their smartphone. This research path yielded reports by Gizmodo, Consumer Reports, Tom's Guide, and others, revealing the importance of adding insurance when buying a smartphone. However, these reports did not list the common reasons why people added a warranty/insurance/protection plan to their smartphone purchases.

Therefore, we proceeded to examine reports highlighting the top smartphone insurance plans with the hope of identifying reasons why people added each company's smartphone insurance plans when purchasing a smartphone. Through this search, we found reports by The Droid Guy and Digital Trends listing the most significant smartphone insurance companies such as Asurion, eSurranty, SquareTrade, Geek Squad, and others. Again, there was no information by these portals indicating the common reasons why people chose to add the insurance plans of these companies when buying a smartphone. Furthermore, we researched the directories of these smartphone insurance brands and located a single report by Asurion revealing the top five reasons why smartphone insurance was necessary. Unfortunately, neither Asurion nor other smartphone insurance companies have any publicly available information listing the common reasons why people add a warranty/insurance/protection plan to their smartphone or the cons for doing so.

Next, we investigated customer reviews of some smartphone insurance companies on review sites such as Trustpilot, Reviews, Consumer Affairs, and others. For this, we examined positive (5-star) and negative (1-star) reviews of Asurion and eSurranty hoping to find similar reviews highlighting why people added their insurance plans to their smartphone and the cons or reasons why they opted out. Unfortunately, this research path showed that both the positive and negative reviews these companies received from customers were related to the customer service and did not reveal reasons why they added their protection plans for their smartphone.

Hence, due to the lack of required information in the public domain, we provided the importance of adding an insurance plan to a smartphone, as reported by Gizmodo, Consumer Reports, and others, as a proxy for the required information. Also, we listed the reasons why people should not add smartphone insurance reported by LifeWire and Fortune, as a proxy for the cons of adding insurance/warranty/protection to smartphones.



Sources
Sources

Quotes
  • "To figure out whether or not you should even spend hundreds on insurance you first need to figure out what kind of coverage your phone has out of the box. A good place to start is with the warranty included with your phone, whether you bought it straight from the manufacturer or from a refurb reseller on eBay—see how long you’re covered for malfunctions that aren’t your fault. "
  • "The second is how expensive your phone is, or perhaps more pertinently, how expensive a replacement phone is going to be."
  • "Insurance is effectively a safety net for getting your main phone up and running again (or putting a replacement in your hands) as quickly as possible—if you’re in a situation where you’ve got alternative safety nets (like a relative who works in a phone repair store), or you’re not so attached to your main phone anyway, perhaps you can do without."
Quotes
  • "If you have children 12 or younger, a plan that covers damage, loss, and theft might save you some headaches. In our survey, 81 percent of people with a smartphone and young children at home said at least one phone had been lost in the previous two years. "
Quotes
  • "Many consumers forgo the extra monthly payments of insurance and hope that they don't become one of the 35 percent who break or damage their devices within the first year."
  • "An iPhone 8, for instance, can cost $699. A broken screen out of warranty can cost you $129 ($149 for the iPhone 8 Plus and $279 for an iPhone X). Insurance immediately becomes worth it after just one incident."
Quotes
  • "To decide whether cell phone insurance is in fact, worth it or not, let's take a look at how much you would have paid in total over different lengths of time both with and without insurance. The results may surprise you and make you rethink getting cell phone insurance."
Quotes
  • "The purpose of buying insurance is to protect against the things that a manufacturer’s warranty does not. While warranty will cover you for mechanical breakdowns and faults, it’s of no help if, like so many of us, you accidentally damage your device. "
  • "Some credit cards includes extended warranty for cell phones purchased on the card. check with your bank before you pay for extended warranty."
Quotes
  • "The problem is that the costs of the equipment protection plans are high, and the benefits of repairing or replacing phones are reduced by deductibles, quality issues, and other loopholes."