Do I really need insurance for my smartphone?

You may have paid only $200 for your latest smartphone, but if you had to replace that device before you became eligible for a subsidy from your carrier, it could cost you more than $600. Is it worth it to get device insurance?

That's the question I answer this time in Ask Maggie. I also offer some advice to an Apple iPhone fan who wants to know if he should wait for the next iPhone, rumored to be out in June or July.

To buy insurance or live dangerously without?

Dear Maggie,

I am getting my son an iPhone 5 for Christmas. I was wondering if I should also consider getting an insurance policy for the phone. Is it a good idea or a waste of money? Would I need to get Apple Care in addition to an insurance plan? And do you think I should get the insurance from a carrier or through a third-party company?

Thanks,
Karen

Dear Karen,

The problem with buying any kind of insurance is, of course, that you simply don't know what will happen in the future. If your son's new iPhone is lost, stolen, or damaged in the first few months of his owning it, then it's a terrific bargain. But if he goes two years with not so much as a scratch on his precious new gadget, it's a waste of money.

Some people would rather save the money they'd spend on the insurance premiums and deductible and hope nothing bad happens to their gadget. While others would prefer to have the peace of mind that comes with knowing their device can be replaced right away without having to pay full price for a new handset.

The first thing you need to figure out is how much insurance will cost you and what it will cover. As you alluded to in your question, there are several options for purchasing smartphone and other gadget insurance. Wireless operators offer insurance plans as do third-party companies. There are also extended warranty plans from device makers like Apple or from retailers like Best Buy, that typically cover mechanical defects to the device and may on some occasions cover some accidental damage coverage. But these programs typically do not cover you for a lost or stolen device.

In general, insurance plans will offer more coverage than an extended warranty. Here are a few things many insurance policies will likely cover:

• Accidental damage (including shattered screens and liquid damage)
• Loss
• Theft or burglary
• Mechanical breakdown or malfunction beyond the manufacturer warranty

Some insurance policies may also cover things like credit monitoring as well as lock, wipe, and locate services if your device is lost or stolen.

Every insurance policy will also have a fee or premium. And they all have a deductible. The fees and deductibles often depend on what kind of device you're insuring. Be aware that many policies charge higher premiums and have higher deductibles for the Apple iPhone as compared with other smartphones.

So make sure you double-check the policy to see what the fees and deductibles are. Before you sign up for any insurance, you should check the specifics and fine print to see what is and isn't covered.

To get you started on your search, here's a little information about a few options.

AT&T and Verizon Wireless offer insurance for the iPhone. But Sprint, which offers an insurance plan for other smartphones, doesn't offer a policy for the iPhone. T-Mobile, which doesn't offer the iPhone on its network, also doesn't have a policy that would cover the iPhone.

There are also insurance policies from third-party companies that you may want to consider. One such company is called ProtectYourBubble.com. It offers insurance for the iPhone as well as other gadgets. This company offers a 10 percent discount for additional policies that you have, either on other iPhones or other gadgets.

Here's a quick look at the offers:

AT&T
Premium: $6.99 per month
Deductible: $199

Verizon Wireless
Premium: $9.99 per month
Deductible: $169 for 8GB, 16GB iPhone 4; 16GB iPhone 4S; and 8GB, 16GB iPhone 5 and $199 for 32GB iPhone 4; 32GB, 64GB iPhone 4S; and 32GB, 64GB iPhone 5

Protect Your Bubble
Premium: $7.99 per month
Deductible: $120 (other smartphones have a deductible of $100)

Which insurance plan is better? As you can see from the information listed above, Verizon has the most expensive insurance plan. Two years of premiums, plus the deductible will set you back $410. AT&T's premiums and deductible are $368 for the iPhone. And Protect Your Bubble's total comes to $312.

Are any of these policies really worth the cost? Again, it's hard to answer this question, since it really depends on how likely it is that you'll need the insurance versus how much risk you're willing to live with if you don't get any insurance.

Remember that if you have to replace the device before your son is eligible for a new contract, it will cost you between $649 to $849 to replace his iPhone with a new iPhone 5, depending on the model you select. You may be able to get a used or refurbished iPhone for a bit less, but iPhones hold their value pretty well, so you'll likely still end up paying several hundred dollars to get the same device.

Personally, I'm a bit of a cheapskate. And I'm willing to take the risk of something happening to my device. I've never had insurance on any of my smartphones. And (knock on wood) I've never had a cracked screen or a device damaged by a liquid. My iPhone 3G was stolen out of my backpack when I was playing in a flag football game a few years ago, but I was eligible for an upgrade from my carrier, so I ended up paying only $200 for a new phone anyway.

That said, I may soon be one of the few people who doesn't get insurance for my smartphone. According to Stephen Ebbett of Protect Your Bubble, 45 percent of smartphone subscribers have insurance for their devices. And he said his company is seeing more and more people sign up for coverage.

"Our sales are growing week on week," he said. "We've been very encouraged by people recognizing the value of their smartphone in their lives. It's not just the cash value of their devices, but the fact that they really can't live without their smartphone for a week."

What about Apple Care?
Apple's AppleCare+ program costs $99 and extends the warranty of the iPhone for another year. The plan covers all repair coverage and technical support. And it also covers up to two incidents of accidental damage, each with an additional cost of $49.

While Apple Care+ is considerably less expensive than the insurance plans, you must remember that it's essentially an extended warranty. And it doesn't cover you if the device is lost or stolen. For iPhone users, this is a particularly important distinction, since iPhone thefts are on the rise. The New York City Police Department said earlier this year that iPhone and iPad thefts went up 40 percent between January and the end of September.

Why? Compared with other gadgets, iPhones have high resale values, so they're often a target for thieves.

Do you need Apple Care+ in addition to insurance? The short answer to that question is no. The insurance policy for the phone will likely cover the same types of technical and accidental damage that the Apple Care+ service offers. The only thing you may lose by forgoing Apple Care+ is online and telephone technical support from Apple. But you should still be able to get some tech support from the Genius Bar at your local Apple store. And your son's iPhone will be covered under the regular warranty for the first year he owns it.

I hope this advice was helpful. And good luck! Happy holidays!

Should I wait for the next iPhone?

Dear Maggie,

I am in need of a new phone (currently using BlackBerry Bold 9930 from Sprint) and would like to get the new iPhone. Here is the issue -- as a guy who likes to have all the latest and greatest tech, I'm rather scared to buy the iPhone 5 with all the "iPhone 5S" rumors that just started. I know it is pretty much impossible to stay up to date with every piece of technology (especially phones). But if I am going to upgrade I would at least like the newest iteration. So what do you think about these rumors? Any chance that these will be true? (It seems nearly every Apple rumor comes true these days.) Should I wait until June/July or just go ahead and get the iPhone 5 that is available now? Lots of questions I know, but these are confusing times.

Thanks in advance,
Jordan

Dear Jordan,

As you mentioned in your question, it's almost impossible to stay up to date with every piece of technology. So my recommendation to you is to not even try to play that game. The soonest we'd likely see an iPhone 5S, if it even exists, is June. That's still half a year away. That's a long time in the fast-paced smartphone market.

It sounds like you need a new smartphone now. So I'd recommend that you stop waiting and purchase a phone that you like right now. If a new iPhone comes out in six months, you can always sell it and still make back a good portion of your money, which you could put toward a new iPhone.

Good luck with your decision.

Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.