Cell Phone Warranties and Insurance

By Tara Donnelly

Last updated 25 May 2015

Whether you're purchasing it outright or locking yourself into a contract, a cell phone can be an expensive investment. And taking into account its value, the frequency with which you'll use it and how relatively fragile it is compared with the old-school brick phones that preceded smartphone technology, it's something that can be easily damaged, lost or stolen - and all of these events can prove as costly as they are stressful.

However, depending on how you buy your phone and if you go through one of the major providers, there are options for protecting your device (and your wallet) against any of the above unfortunate events. Manufacturers provide a complimentary warranty (and additional extended warranties are available to purchase), and all of the big carriers offer phone insurance, either as an add-on to your monthly plan cost when you sign up or to be bought separately if you decide you'll need it down the track.

Telco Insurance

The purpose of buying insurance is to protect against the things that a manufacturer’s warranty does not. While warranty will cover you for mechanical breakdowns and faults, it’s of no help if – like so many of us – you accidentally damage your device. Likewise, if you suffer the misfortune of losing your phone or, worse still, having it stolen, you’ll be on your own. Insurance is always an optional additional purchase, but it exists to give you peace of mind against these not necessarily likely, but definitely possible, mishaps.

What insurance covers (usually):

Accidental damage including drops, cracks, liquid spills, liquid submersion, any damage caused by accident.
Mechanical and electronic failures, if your manufacturer’s warranty has expired and the failure would have been covered under this warranty.
Loss or theft of your phone.

Things to keep in mind:

Most carrier insurers will either repair or replace. You will not get a new phone, rather a ‘refurbished’ one – there are various reports of customers receiving malfunctioning second-hand phones. Some other insurers may offer you a cash payment for the replacement value of your device instead.
You will not be covered for pre-existing problems, issues relating solely to software or data, damage caused intentionally or through recklessness, acts of nature, routine wear and tear, or if the equipment appears to have been dismantled or repaired without authorization.
If you take out insurance through your carrier, it will generally be added on to your monthly cell phone bill.
Before buying individual cell phone insurance, check that you don’t already have existing coverage elsewhere. Renters or homeowners insurance may cover your phone already without you needing any additional protection.

You have two options if you decide cell phone insurance is worth the investment – either taking out a policy through your cell phone carrier when you buy a phone (which usually needs to be done within 30 days of purchase), or through an independent company unrelated to your cell network.

Carrier insurance at a glance (prices and details correct at time of publication):

Bell Mobility Smartphone Care

Between $7 and $13 per month, depending on the level of coverage and phone model.
Provides comprehensive coverage for loss, theft, damage (including liquid damage) and mechanical or electrical defaults after the manufacturer’s warranty expires.
$150 fee applies if you need a replacement phone.
Two replacement phones allowed, with an equipment maximum of $950 per claim.

Rogers Device Protection

Between $7.99 and $12.99 per month.
Provides coverage for theft, loss, accidental damage and out-of-warranty malfunction.
Policy offer a same or comparable handset replacement..
A non-refundable deductible of up to $200 applies, depending on the device.
Two claims allowed within any 12 month period, with a maximum device value of $1300 per claim.

Telus Device Care

$6.00 or $11.00 per month, or pay a total of $99 or $179 upfront for 2 years coverage.
Provides coverage for loss, theft or damage (including liquid damage).
Deductible of up to $200 depending on the device will be charged per claim.
A maximum of three replacements or repairs within any 12 month period, with a limit of $900 per claim.

Is insurance worth it?

While at a glance the idea of protecting yourself against the annoyance and expense of repairing or replacing your phone seems like a good deal, it's important to consider whether paying for insurance is really the best fit for your individual circumstances.

One of the big drawbacks about purchasing cell phone insurance is that you won't receive a new phone if your claim is approved, and your old device is beyond repair. Instead, you'll be sent a 'refurbished', pre-owned device that may not even be the same model as your previous phone.

Look around the internet and you'll find plenty of stories of dissatisfied customers unhappy with having their broken phones replaced with faulty devices, or phones that simply don't match the quality of the customer's original. Most of the terms and conditions for insurance state that replacement equipment will be the same or a 'comparable model with similar features' as your unusable device. Although refurbished phones are supposedly quality tested and in full working order, consider whether you'd be satisfied with what is essentially a second-hand replacement, or if you wouldn't feel cheated to have your high-end smartphone swapped for an older or inferior model.

Next, you'll need to consider the likelihood of ever actually making a claim anyway. If you're someone who is prone to losing or damaging your phone (and there are those among us who seem to be cursed in that area), work in a high-risk environment, or live in an area susceptible to break-ins, then insurance may be worth considering. Similarly, if you have small children who love playing with your phone, there's a higher chance it may end up dropped on the ground or submerged in the toilet. But, if you're the type who is meticulous about their possessions and not accident prone, insurance could well be just a waste of money.

Also, remember that it's up to your insurance provider as to whether or not your claim will be approved. Insurance doesn't cover normal wear and tear, or 'cosmetic issues' that don't affect the phone's ability to function. So even though a cracked screen may make using your phone a frustrating experience, it might not qualify for repairs if you can still use your phone normally.

Realistically, it may just be cheaper and easier overall to buy a second hand cell phone with the money you didn't spend on insurance, rather than fork out monthly and get a used phone anyway if something goes wrong; take the money you would be adding to your phone bill each month and put it aside in a separate bank account in case of cell phone emergency. You can use these funds to repair or replace your phone on your terms rather than an insurance company's; or, put it towards a new phone down the track, if you're lucky enough to keep your phone in one piece until it's time for an upgrade.

Manufacturer’s Warranty

Cell phones (and other electronic devices) carry a one to two-year manufacturer’s warranty, valid from the date of product purchase. Legally, you should be able to read the details of a warranty before you make a purchase. The protection offered by written warranties can vary, so it’s important to check just which parts and problems are covered and which ones are not.

Although the device itself will be almost always covered for the term of the warranty, sometimes replaceable parts such as the battery will not be covered for the whole period.

Warranties, unlike insurance, cover against mechanical faults and failures that are not caused by the device owner. If your device breaks down through no fault of your own and you’re within the warranty period, you are entitled to a repair or replacement for your phone. However, the warranty doesn’t cover accidental damage, theft or loss (which is where insurance comes in). A manufacturer's warranty is also unlikely to cover any consequential damage caused, such as time and expense spent to get the product repaired.

Luckily, warranties will usually cover software issues – so problems like your device crashing or freezing should be faults that your manufacturer can take a look at. It’s important to remember that fixing software problems will require restoring your phone to factory defaults, so it’s essential to back up your data regularly and before you send a device away for repair, so you can restore it once your phone is returned (or if you are sent a replacement phone instead). Personal data, downloads and customised software aren't covered and will be wiped from your device if repairs are required.

There are certain unfortunate occurrences that may cause your warranty to become void. Getting your phone wet will usually cause the warranty to be revoked – most phones have a moistness indicator under the back cover, so if it shows your phone has come into contact with water, you could be out of warranty.

For more basic information on how warranties work in Canada, with specific provincial details, check out the Office of Consumer Affairs website.

Extended Warranty

When purchasing your phone, you may be presented with the option of extending the included manufacturer’s warranty for a fee. Extended warranties will usually offer another 12 months to 2 years of protection against malfunction and failure, on top of the time covered by the original warranty.

By choosing to pay to extend your phone’s warranty coverage, you won’t be buying any additional protection or benefits, simply more time in which your phone manufacturer will repair or replace your device if there’s a breakdown.

Smashed phone image via Shutterstock