Should you get month-to-month phone insurance?

That extra $10 per month cost is probably not be worth it.

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Does phone insurance really add up?

Sarah Jacobsson Purewal/CNET

Paying an extra $5 to $11 per month for month-to-month phone insurance might sound tempting -- especially now that the big wireless carriers have ditched contracts and subsidized phones, and you're paying $650 up front for a new iPhone 6s.

But it's not that simple. First of all, month-to-month phone insurance isn't the great deal it sounds like -- that relatively low monthly fee is only part of the cost you'll pay if your phone is damaged, lost or stolen. For each claim you file, you'll pay a deductible of $50 to $199 (unless it's an old-school flip phone, assume that price is going to be $199), and most insurance companies only let you file up to two claims per year.

So, should you get month-to-month phone insurance? Probably not, but let's take a look at the available plans before we answer that question in more detail.

The plans

There are two ways to get month-to-month phone insurance: You can purchase it from your wireless carrier, in which case you'll simply pay the premium as an add-on to your wireless bill, or you can purchase it directly from a third-party insurance company such as SquareTrade.

The main difference between the two is that carrier-provided insurance usually covers device malfunction, damage, loss and theft, while SquareTrade covers only malfunction and damage. Many carriers, including Verizon and AT&T, offer plans through the third-party insurance company Asurion.

Verizon offers four protection tiers. The top tier, called Total Mobile Protection (TMP), costs $11 per month for smartphones; protects against device malfunction, damage, loss and theft; and carries a $99 - $199 deductible depending on the device. Verizon's deductibles tend to be a little lower -- most high-end Android phones won't hit the $199 deductible. TMP offers the same protection as the second-highest tier, Total Equipment Coverage (TEC), but TMP includes a tech coach feature, which basically means you can chat with Verizon about your device. You don't need this.

TEC costs $9 per device per month for smartphones and combines the two lower tiers: Asurion Wireless Phone Protection ($7.15 per month for smartphones, protects against everything except device malfunction) and Verizon's Wireless Extended Warranty ($3 per month for smartphones, protects against device malfunction).

AT&T's insurance currently costs $6.99 per month per enrolled number, but that price will jump to $7.99 per month in March 2016. AT&T's insurance protects against device malfunction, damage, loss and theft and carries a $50, $125 or $199 deductible, depending on the device. Most high-end smartphones, including any iPhone newer than the iPhone 5, will hit the top deductible tier, so expect your deductible to be $199. Unlike Verizon, however, AT&T rewards you for not filing claims -- you get a deductible discount if you haven't filed a claim in the last six months ($149 vs. $199) or 12 months ($99 vs. $149).

Sprint offers a two-tiered insurance plan -- like Verizon, the top tier ($13 per month) simply includes tech support and device tutorials. Sprint's insurance costs $9 to $11/month, depending on which deductible tier your device is in. There are four deductible tiers: $50, $100, $150 and $200. Most smartphones will be in the top two deductible tiers and will therefore cost $11/month. Like Verizon and AT&T, Sprint uses Asurion -- so its plan covers device malfunction, damage, loss and theft.

T-Mobile's insurance costs $8 per device per month and protects against malfunction, damage, loss and theft. The plan includes a $20 to $175 deductible; most high-end smartphones will end up costing between $150 and $175 to replace. T-Mobile also offers an enhanced protection package for $10 per month that includes Lookout Mobile Security Premium. If you're already enrolled in T-Mobile's JUMP program ($10/month), which lets you upgrade your phone once you've paid off 50 percent of its cost, insurance is included.

SquareTrade is one of the most popular third-party insurance providers, and it's cheaper than most carrier-provided options. Of course, it also offers less protection -- with SquareTrade, you won't be protected against loss or theft. SquareTrade plans cost $6 per month for smartphones (or less if you purchase one, two or three years in advance) with a $75 deductible. Because the company only covers damage, it will only repair your phone -- not replace it. In the event that your phone is damaged beyond repair, SquareTrade will just give you money to replace it (enough for a refurbished phone -- not a new one).

Should you get phone insurance or not?

This is a difficult question to answer, because it really depends on you. If you live in an area where phone theft is rampant, or you're the type of person who's likely to lose your phone, carrier-sanctioned phone insurance could save you hundreds of dollars. But if you're just clumsy, you may not come out ahead. Apple will fix an iPhone 6S screen for $99 if it's still under warranty or covered by Apple Care+ -- that's less than a year's worth of Verizon insurance.

Month-to-month phone insurance comes with low premiums, high deductibles and a limit on claims (Asurion lets you make two claims per year, with a cap of $1,500 per claim). If you make one claim per year, you'll pay between $270 and $330 for a new phone -- and the phone may not even be new. The insurance company has the right to choose whether they want to repair your phone or replace it with a phone of equal value, which means you're likely to get a refurbished phone instead of a brand new one. If your phone is more than a year old, phone insurance makes no sense because older high-end smartphones are subject to the same deductibles as newer high-end smartphones.

French bulldogs = accidental damage.

Sarah Jacobsson Purewal/CNET

Device-specific insurance isn't your only option. If you purchased your phone with a credit card, your credit card company may offer an extended warranty that covers device malfunctions once the manufacturer's warranty expires. Also, if you pay your phone bill with a credit card, your credit card company may offer some protection against loss or theft (my Wells Fargo card offers $600 worth of protection, subject to a $25 deductible, against damage or theft). If you have renter's insurance, your phone is most likely covered in your policy -- though renter's insurance is usually subject to a higher deductible ($500+) per claim.

For most people, month-to-month phone insurance is a bad idea. You're better off extending the manufacturer's warranty or buying Apple Care+.

Editors' note: This How-To article was originally published on December 29, 2014 and was updated on December 29, 2015 to reflect new information.

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