Is Smartphone Insurance Worth the Cost?

Many smartphone users have trouble keeping their phones safe. In fact, up to 33% are said to lose or break their cellphone during its typical 2-year life-span. With those odds, it’s not surprising that protection and insurance packages have become a routine add-on to cellular plans. On the surface, the cost is relatively low, averaging about $13/month for premium coverage. With the retail price of phones skyrocketing, insurance seems like a smart investment, especially if you are someone likely to lose or break your device. But is it a smart investment for your company-owned phones?

Let’s pretend your company has 50 smartphones on its corporate plan. If we were to have each device insured for the average device life-cycle of 2-years, we would spend a total of $15,600 on insurance. Now, let’s pretend that the national average of 33% of users broke or lost their device. If the average price of a new device is around $1,000, we would have spent $17,000 and the insurance plan would have been a bargain, right? Not exactly, no.

First, there’s a deductible that must be paid for each device. Those can vary a bit per carrier, but they average out to about $199. Second, you don’t receive a new cell phone as your replacement (with a value of $1,000), instead you receive a refurbished device in the same model as your broken one. Third, the national average of 33% includes teens and young adults, the demographic most likely to lose or break their phone. We’ve found that the real ratio for corporate accounts is closer to 20%, with 15% losing their device or breaking it beyond repair and 5% having an easily fixable break. So let’s run that math again, this time assuming 20% of our users needed to take advantage of the insurance plan.


By going down the insurance route, we pay roughly $17,590 over 2 years. Let's take a look at what we could have done instead and how it affects the cost.

This time we'll ditch the insurance plans, replace the 15% of phones that were lost or broken beyond repair, and fix the remaining 5%. We’ll use the average cost of a refurbished device as the replacement cost (similar to what we would have received from our insurance plan) and the replacement of a cracked screen for the repair cost.



And just like that, we saved $12,992.

In theory, we could have replaced all 10 devices with a brand new iPhone X and still saved ourselves $7,590.

The numbers only increase for accounts with more devices. What could your business do with an extra $12,000? What if you could free up $127,000 or $500,000? Those are absolutely realistic savings depending on the number of devices you carry.


Take a look at the number of claims you've filed over the last 2 years. Chances are that it will be 20% of your devices or less. Save the money on insurance and put it to better use growing your business.



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