Insurance Doesn’t Guarantee a New Phone

The latest generation iPhone from Apple costs $199 on a two-year contract and $649 contract-free. Some 60 million people have resorted to insurance to avoid the costs of paying for replacement phones in the event they’re lost, stolen or damaged.

Asurion, a technology protection services provider, says that, one in four people will need replacement phones by the end of the year. It says investing in insurance, which costs just $4 to $6 a month, is necessary, as replacing a smartphone can be time consuming and expensive, with the average retail price of a smartphone climbing over $460.

The Better Business Bureau (BBB), a nonprofit organization focused on advancing marketplace trust, says that smartphone owners need to read the fine print before paying for insurance.

According to the BBB, Nashville, Tennessee-based Asurion, which has an A+ rating, has been bombarded with complaints from smartphone owners who filed insurance claims but obtained refurbished — instead of brand new — phones as replacements.

BBB notes that insurance companies — not just Asurion — have the right to give claimants a phone with refurbished parts, or event a phone with a different brand, model or color.

BBB warns that smartphone owners need to read the terms and conditions offered by the insurers before spending the extra $5 a month for insurance. Some insurance policies don’t cover all types of damages; insurance may be redundant to the manufacturer’s warranty; and most contracts only offer to provide a phone that’s comparable to the one being replaced, instead of the latest top-of-the-line model.