Buying insurance for that new iPhone 5 may seem like a good investment. But all-too-many policies have huge loopholes, big deductibles and high premiums. Some bozo grabbed my friend’s purse while she was sitting in Golden Gate Park a while back. Along with her wallet, he snagged her Metro PCS phone. Since she’d been paying a few bucks a month for insurance, she assumed she’d be repaid. Wrong. After a week of haggling with Metro PCS and then the insurance carrier, she simply gave up in frustration. My friend’s experience was far from unique. It turns out that many of the policies that cover expensive smartphones have so many loopholes, and so many built-in hurdles to receiving a benefit, that many consumer advocates think they are simply not worth the money. “It’s an insurance product that borders on the unnecessary,” says Joe Ridout, of Consumer Action in San Francisco. “By the time you’re near the end of a two-year contract, you may well have already paid as much as the phone is worth in monthly premiums,” he told me. Michael Gikas, a senior electronics editor at Consumer Reports was even blunter. “It’s a bad investment. The deck is stacked against consumers,” he told the San Francisco Chronicle. Not all of the companies that offer cell phone insurance are difficult to work with, but Ridout’s group gets complaints from consumers who can’t seem to get the company to hand over the money. When my friend finally reached someone at the insurance carrier for MetroPCS, he first made her fill out a long claim form. It wasn’t accepted because it didn’t include a copy of a police report. Like many victims of petty crime, she knew there was no point in going to the police so she hadn’t filed one. But tell that to a company that’s trying its best not to pay up. iPhone 5 Upgrades: Beware of the ‘Verizon Tax’ Amazon’s Kindle Fire HD Data Plan: Don’t Be Misled There’s another issue as well, and that has to do with the fine print in many of these contracts. When James Temple, a columnist at the San Francisco Chronicle, checked his policy he was shocked to find that, “replacement equipment may, at our option, be refurbished equipment or different equipment of like kind and quality.” Translation: You might get a different phone. And who’s to say what “like kind and quality” really means. The fine print also excludes damages including cracked screens unless they affect the “mechanical or electrical function” of the phone. Again, who decides what really affects the use of the phone? And don’t forget about the deductible, which can be quite large. No doubt, says Ridout, that there are some people who make out very well when they have an insurance claim related to a cell phone. If you lose your $199 iPhone early in your contract without insurance, a replacement will cost more than twice that because you’d be paying the full, unsubsidized price. But that’s an exception. For most of us, cell phone insurance turns out to be a really bad buy. Avoid it. (Image courtesy of Nerdist.com) Related content brandpost Sponsored by SAP When natural disasters strike Japan, Ōita University’s EDiSON is ready to act With the technology and assistance of SAP and Zynas Corporation, Ōita University built an emergency-response collaboration tool named EDiSON that helps the Japanese island of Kyushu detect and mitigate natural disasters. By Michael Kure, SAP Contributor Dec 07, 2023 5 mins Digital Transformation brandpost Sponsored by BMC BMC on BMC: How the company enables IT observability with BMC Helix and AIOps The goals: transform an ocean of data and ultimately provide a stellar user experience and maximum value. By Jeff Miller Dec 07, 2023 3 mins IT Leadership brandpost Sponsored by BMC The data deluge: The need for IT Operations observability and strategies for achieving it BMC Helix brings thousands of data points together to create a holistic view of the health of a service. By Jeff Miller Dec 07, 2023 4 mins IT Leadership how-to How to create an effective business continuity plan A business continuity plan outlines procedures and instructions an organization must follow in the face of disaster, whether fire, flood, or cyberattack. Here’s how to create a plan that gives your business the best chance of surviving such an By Mary K. Pratt, Ed Tittel, Kim Lindros Dec 07, 2023 11 mins Small and Medium Business IT Skills Backup and Recovery Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe