Top 4 reasons not to insure your Smart phone

Top 4 reasons not to insure your cell phone
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Here are a few deep thought reasons why you should save your money for something else that to use it to enrich the insurance companies. 
4. You may get an apple to replace an orange. To be fair, the insurance cost might not be so bad if you were guaranteed the latest top-of-the-line phone as a replacement. However, most insurance contracts stipulate that consumers receive a phone that's "comparable" to the one being replaced. In fact, it might not even be the same model. If you lose your phone, say, within two months of buying it you probably would make out all right because the replacement phone will be a recent model. However, if you lose your phone a year and a half after its purchase, you're going to be offered a replacement model that's a year and a half old. Because cell phone models, styling and features change rapidly,

"No one's going to want a model that's a year old, but that's what they're going to give you," says Keiter. So in effect, over 18 months you may well pay $100 to $200 (18 months x $5 = $90 insurance premium plus $50 to $100 deductible) to get an outdated phone not worth anywhere near that amount. 

3. You may get a lemon to replace an orange. Worse yet, don't assume you'll be getting a new phone. "If the phone is replaced, it almost always is replaced with a refurbished phone, not with a new one," says Sue Macomber, consumer advocate with the Utility Consumers' Action Network, a nonprofit utility watchdog in San Diego. And there's no guarantee that refurbished cell phone is in great condition.
Macomber warns that her organization has received complaints from consumers who have received damaged phones through their insurance policies and she urges consumers who receive one to be on the lookout for defects. "One of the things people need to check for on a refurbished replacement is to see if there are little dots showing water damage," she says. Most cell phones have water-sensitive stickers inside the phone or on the battery that hold little dots that turn red if the phone gets wet. 

2. Your peripherals may not fit. Even if the replacement phone is in good working condition, it may be a different model from the one you previously owned and that means your AC adapter, car charger, earpiece and other accessories might not work with it. "You may have to go out and buy new accessories for that phone. Those accessories could easily cost you more than the phone is worth," says Kramer. These items could cost $50 to $100, pushing the overall cost of insuring and replacing your phone far beyond what it would cost to buy a new one.
And (drumroll) the No. 1 reason not to buy cell phone insurance is ...

1. You probably won't lose the phone. Many people never lose or break their phones, so the money paid out for insurance is money down the drain. But what if you do? Try this instead of buying insurance: Every month you have the phone put the $5 premium money into a mayonnaise jar. If the phone is lost or stolen or completely breaks down, add the $50 or $100 that you would have paid for the deductible and go buy a new phone. If nothing happens to your phone, at the end of the two years you have an extra $120.
For klutzes only

Despite all these negatives, there are some people for whom insurance might be the best move, experts say. First, you might consider it if you have a very expensive phone. After all, the cost to insure a $500 phone is the same as a $50 phone. Next, teenagers may be less careful with their phones than adults, so they might be more likely to lose them or drop them. Even some clumsy adults may fit that profile. You should consider it, "If the phone is for a teenager or someone who has a proclivity to lose it or if you're a klutz," says Keiter.
Likewise, for the person who travels a lot or handles his or her phone a lot throughout the day, insurance may be reasonable, says Macomber. "It highly depends on the person's individual circumstances and their patterns of where they take their phone and whether or not they tend to lose keys and other things."

Copyright 2013, Bankrate Inc
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