Having your cell phone broken or stolen can cause major grief and a significant dent in your wallet. Cell phone carriers and some private insurance providers are quite happy to soothe your fears with an insurance plan for your phone. However, you have one alternative for coverage you may never have thought of — your bank.
If you have a bank-issued credit card, take a close look at the fine print in your agreement. You may already have a free cellular phone protection provision that you are unaware of, and if not, it may be possible for you to add this coverage for minimal cost. All you have to do to maintain this protection is to pay your cell phone bill with the credit card that contains the coverage. (Banks may also require that the phone be purchased with the same card.)
Generally, this coverage is in perpetuity compared to the contract-based terms of carrier insurance programs like AppleCare — assuming that you always use the same credit card to pay your cell phone bill.
Here are a few items to consider as you compare your cell phone insurance options.
Coverage Dollar Value — Most plans provide coverage up to $200-$250 with a $50 deductible, but some cards offer higher coverage amounts. Wells Fargo offers the most with $600 per incident. Bank cards generally have lesser limits on the number of times you can file claims – twice per year is a common limit.
Typically, credit card policies require that the original phone be purchased through the carrier (either at a retail store or through their internet store), and that the replacement phone also be purchased there. Your replacement phone will be more expensive without a service plan contract renewal, so you may still be on the hook for some expenses.
Coverage Exclusions — Exclusions vary, in both the carrier insurance and credit card coverage – but in general, insurance from cell phone carriers are more comprehensive and therefore more expensive.
Insurance through your credit card typically covers theft or accidental breakage, but not loss, breakage from abuse, or cosmetic damage that doesn’t affect the function of the phone (think cracked screen). Check with your card carrier regarding common damage issues that are not explicitly stated, like damage from carrying the phone in your back pocket or the dreaded plunge into the toilet.
Read the exclusions list in full to make sure you understand what is covered, although some exclusions may produce a chuckle. For example, the Wells Fargo agreement excludes such things as damage caused by radioactive contamination or vermin. Now you have yet another reason not to hang out in the sewer near the nuclear power plant!
Supplemental Insurance — Credit card coverage is usually supplementary to any plan you have with a carrier, as well as homeowner’s, renter’s or auto insurance policies. If the loss falls under those policies, the credit card’s coverage only kicks in after the limit of the other policies has been exceeded.
If you need to file a claim, you will need the necessary receipts to prove bill payments, purchase of the phone (if required), and the police report for any instance of theft.
You probably should not open a new credit card account just to receive coverage on your cell phone, but if you are planning to open a new account or transfer from an existing one, look into the coverage options. You may be able to receive theft and damage coverage that suits your needs and save money in the process.
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