Should You Insure Your New iPhone?

The millions of people who purchased the new iPhone 4S are toting around glass-encased mobile devices that can cost $600 or more to replace. That means one accidental plunge onto the concrete—or as one unlucky Twitter user mentioned, a ride through the laundry cycle—can be very expensive. To protect yourself from that kind of damage, should you insure your iPhone?

Conventional wisdom suggests that for most electronics products and appliances, the price of insurance just isn’t worth it. That’s because stores often cover defects for the first year anyway, and the chances of accidental destruction aren’t high enough to warrant the extra expense. But the iPhone is a little different, because it is so expensive and so fragile. 

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Consider finance expert Liz Pulliam Weston’s take on cell phone insurance: Her advice is to skip it, since most cell phones are cheap and easy to replace. She says many consumers get their insurance planning exactly backward, insuring the cheap things and taking risks on the expensive ones (by skipping or under-insuring themselves when it comes to car, health, and life insurance).

Says Weston, “You don’t want insurance to cover what you could pay yourself out of pocket. Insurance should be reserved for catastrophic expenses—those you couldn’t easily cover on your own.”

So where do iPhones stand? The cost of replacing the latest iPhone falls somewhere between the standard cell phone and a car, and the answer to whether you should insure it isn’t clear-cut. Apple offers a limited warranty on the iPhone for one year, but it doesn’t cover lost phones or user-inflicted damage.

Gizmodo offers a useful overview of options, which include a $12 per-month plan from the insurance company Asurion. (The policies also come with deductibles of up to $199.) As Gizmodo points out, that means you’ll pay $288 in monthly fees over a two-year contract plus up to $199. In other words, you’re paying close to $500 to protect yourself from a $600 or $700 replacement cost. Considering you can always replace your iPhone with a used or cheaper version instead of paying full price, purchasing that kind of full-coverage insurance probably isn’t the soundest financial move.

If you do opt to skip insurance, you might want to invest in a heavy-duty case, such as the Speck CandyShell, to protect it from unexpected drops.

Oh, and in case you’re wondering what Siri says when you ask her whether the iPhone should be insured: She avoids answering the question directly, but offers a list of local insurance agents.

Did you decide to insure your iPhone? 

Twitter: @alphaconsumer