I Did the Math on Phone Insurance. It’s Mostly a Scam.

So I cracked my phone screen last month. Like, really cracked it. Dropped it face-down on my driveway while trying to wrangle Liability back into the coop. The spider web pattern was so bad I couldn’t read texts properly.

My first thought was “thank god I have phone insurance.” My second thought, after actually looking at my policy, was “wait, this doesn’t make any financial sense.”

Let me walk you through the math that made me realize phone insurance is mostly a terrible deal for most people.

What I Was Actually Paying

I had Verizon’s device protection plan. $17/month. I’d been paying it for two years without thinking about it.

That’s $408 in premiums. For two years of coverage on a phone I bought for $1,099.

Then I looked at the deductible: $229 for a screen repair, $99 for battery, $229 for other damage. So to actually USE the insurance, I’d pay even more.

So if I cracked my screen (which I just did), my total cost would be: $408 (premiums) + $229 (deductible) = $637.

Meanwhile, Apple charges $279-$379 to replace a screen WITHOUT insurance. Third-party repair shops charge $150-$250.

I paid $637 in insurance and deductibles for a repair that would have cost me $200-$350 if I’d just paid out of pocket. I literally paid more WITH insurance than I would have WITHOUT it.

The Math Gets Worse the Longer You Look

According to Consumer Reports, most extended warranties and insurance plans are bad deals for consumers. Phone insurance is no exception.

Here’s why the math almost never works out:

You’re paying for coverage on a depreciating asset. Your $1,000 phone is worth maybe $400 after two years. But you’re paying the same premium the whole time.

The deductibles are high. Most plans have deductibles between $99-$275. That’s not protection—that’s just paying less for a repair you might have skipped anyway.

Replacement phones are usually refurbished. That “replacement phone” you get isn’t new. It’s a refurbished unit that’s been in someone else’s pocket. For that price, you deserve new.

The insurance companies are wildly profitable. These plans have profit margins of 50-70%. You know why? Because they’re collecting way more in premiums than they’re paying out in claims. That money is coming from… you.

Let’s Run the Numbers on Different Scenarios

Scenario 1: You break nothing for 2 years

• With insurance: $408 in premiums, $0 in repairs, total cost $408
• Without insurance: $0 in premiums, $0 in repairs, total cost $0
• Winner: No insurance (saved $408)

Scenario 2: You crack your screen once in 2 years

• With insurance: $408 premiums + $229 deductible = $637
• Without insurance: $250 screen repair at third-party shop
• Winner: No insurance (saved $387)

Scenario 3: You completely destroy your phone and need a replacement

• With insurance: $408 premiums + $269 deductible = $677 (you get a refurbished phone)
• Without insurance: Maybe $400-$600 for a comparable used phone
• Winner: Basically a wash, but at least you chose your replacement

Scenario 4: You lose your phone

• With insurance (theft/loss coverage): $408+ premiums + $269 deductible = $677+
• Without insurance: Full price of new phone
• Winner: Insurance might make sense HERE if you’re prone to losing phones

The only scenario where insurance clearly wins is loss/theft—and only if you’re actually likely to lose your phone. If you’re not particularly careless, you’re paying for protection against a risk that’s not really yours.

What About AppleCare+?

AppleCare+ is better than carrier insurance but still not great for most people. Here’s the current pricing:

• iPhone 16 Pro: $199/year or $9.99/month
• Screen repair deductible: $29
• Other damage deductible: $99

So if you pay for 2 years ($398) and crack your screen once ($29), you’ve paid $427 for a repair that costs $279 at Apple without AppleCare+. Still not a great deal.

AppleCare+ WITH theft/loss coverage costs more but might make sense if you lose phones. Otherwise… probably not.

The Credit Card Trick Nobody Knows About

Here’s the thing though. Many credit cards offer free cell phone protection if you pay your monthly phone bill with the card. This is genuinely useful and costs you nothing extra.

For example:

• Chase Ink Business Preferred: Up to $600/claim, $100 deductible
• Wells Fargo Active Cash: Up to $600/claim, $25 deductible
• US Bank cards: Various coverage levels

Check your credit card benefits. You might already have phone insurance you’re not using. The coverage usually isn’t as comprehensive as a paid plan, but it’s FREE.

Self-Insuring: The Math-Smart Approach

Here’s what I actually recommend: skip the insurance and put that $17/month into a savings account instead.

After two years, you’d have $408 saved. That’s enough to cover most repairs and contribute significantly to a replacement if needed. And if nothing goes wrong? You keep the money.

This is called “self-insuring” and it works for things where:

• The potential loss is affordable (annoying, but not devastating)
• You can save up an emergency fund
• The insurance premiums + deductibles are a bad deal

Phone breakage falls into all three categories for most people. Yes, dropping your phone sucks. But it’s not financially catastrophic. It’s annoying and expensive, but it won’t ruin you.

Now, your renter’s insurance? That protects against stuff that WOULD financially ruin you—like a fire destroying everything you own. That’s worth paying for. Phone insurance? Probably not.

When Phone Insurance Actually Makes Sense

I’ll be fair. There are specific situations where phone insurance is reasonable:

You are extremely clumsy or careless. If you’ve broken 3+ phones in the last 5 years, okay, maybe the math works out for you.

You genuinely cannot afford a surprise $300-$500 expense. If that would break your budget, insurance provides predictability. Though I’d argue you should build an emergency fund instead.

You live in a high-theft area and regularly lose things. The theft/loss coverage is the one piece that’s hard to replicate otherwise.

You have the newest, most expensive phone. Repair costs are higher on flagship phones. The math is slightly less terrible. Still not great, but less terrible.

It’s free or heavily subsidized. Some employers or credit cards offer it for free. Take the free thing.

My Actual Recommendation

For most people:

1. Skip the carrier insurance and AppleCare+.
2. Check if your credit card offers free phone protection.
3. Put what you would have spent on insurance into savings.
4. Buy a good case and screen protector ($30-$50).
5. Accept that if you break your phone, you’ll pay for repairs out of pocket.

You’ll almost certainly come out ahead over your lifetime of owning phones. The insurance companies know this—it’s why they’re so profitable.

I’m canceling my Verizon device protection this week. That’s $204/year I’ll keep in my own pocket. Even if I break my phone, I’ll still probably come out ahead. And if I don’t break it? Free money.

Liability just stepped on my phone case. She seems to think it’s a great toy. At least with a good case, my phone survives chicken attacks. No insurance needed.