Mobile Device Insurance

Cracked iPhone ScreenA question that comes up from time to time is the issue of mobile device insurance. This can include AppleCare, extended warranties and third party insurance of mobile devices. Because this question so frequently comes up, I figured it was time to do a blog post with a few opinions and options for mobile device insurance. If you’re considering any of these options, I encourage you to investigate all the policies, terms, conditions and coverage and then weigh the risks and benefits to see if one of these policies fits your needs. AppleCare

As a general rule, I don’t like extended warranties and almost universally refuse to buy them. However, the major exception to that is AppleCare. I always buy AppleCare on my portable Macs and strongly recommend it for the purchase of any notebook or iMac. Notebooks are prone to everyday bumps and jostles that can cause damage to the internal components. Notebooks have a higher failure rate than desktop machines and a repair can cost anywhere from a couple hundred dollars to practically the price of a new machine.

I recommend AppleCare on the iMac because the compact form factor and large display is another source of problems. The iMac is very difficult for even the most technically advanced consumer to repair themselves, and the cost of even a minor repair will be very expensive.

On the Mac Pro and the Mac Mini I’m a little more neutral on the idea of AppleCare. Every machine comes with a 1 year standard warranty and my experience is if something was going to go wrong it will likely so in the first year. These machines are also less prone to everyday wear and tear simply because they’re stationary. On a Mac Pro or high end Mac Mini, AppleCare may make more sense because of the cost of replacement. It’s also worth noting that if you buy a display with your MacPro or Mac Mini it will also be covered by AppleCare, so you get a little extra bang for the buck.

I do not recommend AppleCare on iPods, AppleTVs, iPhones or iPads. On these devices AppleCare only extends the warranty of the device from 1 year to two years, so you’re paying for not a lot of extra coverage. These devices are also most prone to accidental damage, loss or theft, which are not covered by AppleCare.

In Summary:

Notebooks and iMacs – Strongly Recommend AppleCare

Mac Pros and Mac Minis – Neutral/Recommend (strongly recommend if buying with a covered display)

Portable Devices - Discourage AppleCare Purchase

David Sparks and I spoke at length about the topic of AppleCare on Mac Power Users Episode 14, Buying and Selling Macs. If you’re interested in this topic, I’d recommend you take a listen.

Insurance vs. AppleCare

Typically, insurance and AppleCare cover different things. AppleCare only covers manufacturer defects. It does not cover loss, theft, accidental damage, etc. By constrast, insurance typically doesn’t cover manufacturer defects but may cover loss, theft and accidental damage. If you want to be fully covered, you may need to purchase both AppleCare and insurance. (SquareTrade is the exception in that it provides some extended warranty benefits.)

Insurance Options:

There are a couple of different insurance options. These options will vary depending on your area and your situation. I can only speak from personal experience and quotes that I have received. So the information I provide below is based on my quotes, your coverage options and prices may vary.

Local Agent:

I consulted my local State Farm agent to find coverage for my notebook, this is my preferred method of insuring mobile devices. I’ve found the costs to be the most competitive and I’m much more comfortable dealing with someone I have a personal relationship with and can deal with locally. I have auto and home insurance through State Farm so I called them up to discuss the possibility of adding coverage for some of my mobile devices and this is what I learned:

Homeowners/Renters insurance will only cover technology under specific circumstances, and typically there’s a deductable. There is also the concern of the adverse impact filing a claim will have and the risk your insurance company will drop you or raise your rates. You should contact your insurance agent to determine what coverage you have under your policy, or ask about the possibility of adding a rider to cover your mobile devices. However, I found that having a separate policy made the most sense for me.

My agent recommended a Marine Policy for my MacBook Pro. It would be a policy separate from my homeowners and auto insurance so that if I had to file a claim on that policy, I wouldn’t run the rick of my homeowners or auto insurance rates going up or being canceled. I also had the advantage of the policy having no deductable and would cover my MacBook Pro for replacement value. Unfortunately, the agent could not sell me coverage on my iPhone or iPad. He told me they use to offer phone insurance, but had to stop. My $0 deductable policy for my MacBook Pro costs me around $35 a year and covers theft, loss and accidental damage. For me, the peace of mind is worth the minimal cost.

You can probably get the best deals from a company you already do business with. But if you don’t get the answer you want form your local agent, try the agent for another company. They all have different policies and different options. Insurance varies by state. For example, I know some of my podcasting friends in California can’t get this type of coverage from their State Farm agent, so availability varies.

Technology Specific Insurance Companies

There are a couple of insurance companies out there that specialize in insurance for mobile devices. Safeware and SquareTrade are the most popular options, although there may be others. David Sparks turned me on to this idea and has policies on his mobile devices with Safeware and SquareTrade however he’s never had to file a claim so can’t speak to that process.

Both these companies offer insurance for notebooks, iPhones and iPads. Safeware offers protection from theft, accidental damage, power surge, and theft.  SquareTrade takes a slightly different approach and offers a more traditional extended warranty plan with the option to add accidental damage protection for another premium. (Loss or theft protection typically isn’t available from SquareTrade.) Because each of these companies offer different solutions depending on the product you want to cover, I suggest you look at both options to compare the features.

I have no personal experience with either of these companies. Please perform your due diligence and investigate their terms and reputation.

Insurance from the Retailer

Insurance may also be available from your carrier or retailer. Most phone companies and retail stores offer some kind of insurance or extended warranty policy. Make sure you investigate these options and their cost. Be sure to look out for unexpected deductibles and monthly fees. BestBuy has an extended warranty program and AT&T is supposedly getting into the iPhone insurance business soon.

Do Warranties and Insurance Make Sense?

This is a highly debatable issue. As a general rule, I avoid extended warranties. My philosophy is that devices will typically fail within the normal warranty coverage due to some kind of design or manufacturing defect or they’ll last until they wear themselves out, typically after a warranty period has ended. You can spend a lot of money on additional warranties and insurance that you never use and wish you had that money in your pocket to buy other things.

If you’re particularly accident prone, or the device is going to be used by someone who is accident prone (teenage boys for example) then insurance may make more sense. Just keep in mind, it is insurance and if you file a claim or two, you’ll probably be dropped or non-renewed.

Insurance or extended warranties may make more sense if the cost of replacing the device would be a significant hardship or impossible due to your financial circumstances. However, you also must ask yourself, if you don’t have appropriate savings to cover an unexpected device replacement, should you really be spending your money on that device in the first place?

There is also the peace of mind factor that comes into play. If you’re so paranoid that you’re going to loose or break your laptop that you never take it out of the house, why did you even bother to buy a laptop? In this case, your fear is depriving you of using the device to the full potential. If this is a serious concern, you may want to consider buying the insurance and living your life.

Other Options:

Explore what type of insurance you may already have on your devices. Does your existing insurance cover your devices? If so, under what circumstances?  Do you have any alternative sources of coverage? Some credit cards may offer extended warranties or replacement protections on some purchase. Make sure you explore these possibilities as well. If you use your device for business, is it possibly covered under your employers insurance or will they pay for repairs or replacements? There are all kinds of special circumstances out there, make sure you explore your options fully.

Read the Fine Print:

Make sure you know what you’re getting yourself into before you buy anything. What’s covered and what’s not? What’s the deductable? What’s the claims process like? Can you immediately go out and replace the device or is their some kind of waiting or investigation period?  What are the remedies if you’re not satisfied with your service? Make sure you understand the terms and conditions of your contract before you hand over your cash.

Always Have a Plan B:

Insurance coverage may not be perfect. In many cases there is a period of time when you’re without your device while the claim is investigated or the item is off for repair. In the case of a phone or computer, that can be a big deal. What’s your contingency plan?

Be Smart

Insurance only covers the replacement of the device: not the data on the device or the potential consequences of lost data. As always, make sure you have appropriate backups and security methods so that if your device is destroyed, lost or stolen, you don’t also have to deal with the possible repercussions of data theft or reproducing your work.