Mobile phone insurance is a popular way to protect your shiny new phone.
But those monthly payments add up over time and deductibles aren’t always budget-friendly.
If you’re looking for an alternative, more and more credit cards offer mobile insurance to help protect against damage or theft.
There are a few caveats to keep in mind, but most cards compete with or beat the offerings from carriers, manufacturers, and third-party insurance services.
The Current Options
While phone protection as a credit card perk is still a relatively new offering, several cards include excellent mobile phone protection coverage as part of their perks.
|Card Name||Claim Limits/Deductibles||Exclusions||Rewards||Annual Fee|
|Up to $1,500 per claim with phone value depreciating at 2% per month; Deductibles are set at 10% of the value of your phone after depreciation; Limited to four claims per 24-month period across all CIBC cards||Lost phones||1 to 2 points per dollar||$120|
|Up to $1000 coverage with phone value depreciating at 3% per month; Deductibles range from $25 to $100 depending on phone value; One claim per year with a maximum of two claims per four years||Cosmetic damage that doesn’t affect phone’s ability to function||Up to 1% cashback||$0|
|Up to $1,000 coverage with phone value depreciating at 2% per month; Deductibles range from $25 to $100 depending on phone value; One claim per year with a maximum of two claims per four years||Cosmetic damage that doesn’t affect phone’s ability to function||1 to 4% cashback||$120|
The Fine Print
While exact considerations will vary between cards, most share some common policies and concerns you should know about before relying on a credit card for mobile phone protection.
1. Coverage Activation Times
In most cases, phone protections will not activate until at least 30 days after you’ve purchased your phone and paid your first phone bill. Sometimes, this unprotected window extends as far as 90 days from purchase.
2. Coverage Terms
Most credit cards with mobile phone protection cover theft, accidental damage, and device failure. They might also cover other items, such as smartwatches and tablets, but you’ll want to check exact terms before deciding.
While this coverage will handle most of the big threats to your phone, be sure to read any rules about claims. For example, most won’t cover loss unless you can prove it’s likely stolen.
Even if someone steals your phone, you might run into additional loopholes. For example, some cards won’t cover phones stolen from checked luggage during travels.
Most cards also don’t cover accessories or batteries. So if you’re device quits holding a charge, you’re still on the hook for replacing it yourself.
In most cases, damage must also impact functionality before you can claim it using your card’s protection.
This means chips, scuffs, scratches, and even cracked screens might not be severe enough to warrant replacement.
Also, you’ll want to see if this coverage is a primary policy or if the insurer intends for the coverage to supplement other protections you might have.
Some cards work alongside homeowner’s insurance, renter’s insurance, or other forms of insurance to extend protection instead of being a main means of protection.
If so, they might require you make claims against other insurance options first before they will pay out.
Depending on requirements, this could impact the usefulness and value of the protection offered.
While most credit cards offer mobile insurance as a “free” perk. There are still costs to consider.
In some cases, cards with protection have an annual fee.
If you choose a card solely for the mobile protection and wouldn’t have it otherwise, this means you’re essentially paying the annual fee for mobile protection.
There is also the interest to consider if you don’t pay off the card balance in full each month. With many of this year’s top end phones costing four figures, that interest can pile up pretty fast.
Finally, you’ll pay a deductible should you need to make a claim.
While terms vary between cards, most base the deductible on the value of the phone.
If you have a high-end phone, you could be looking at $100 or more at the time you make your claim.
That’s not a small sum of money, but it’s cheaper than paying for a replacement and likely lower than the deductibles you’d find through carrier or third-party protection plans.
4. Annual Claim Limits
Most plans feature an annual claim limit.
This is standard for insurance and protection plans. However, you’ll also want to check to be sure what the total term limits are on protection.
Many credit cards with phone protection will offer a certain limit for one year, then another over two years.
Even if you stay within claim limits, many protection plans will also limit your total number of claims in a period.
After you’ve made one claim, you may find you only have one more available for the next 2 to 4 years.
5. Payment Requirements
You will need to pay for your phone with the credit card to get protection.
Some cards might still offer protection if your carrier gives you a discount on your device, but you’ll need to check the terms to be sure -- especially if the discount is because the phone is refurbished.
Many cards will also require you to pay your monthly phone bill using your credit card to activate protections.
6. Who is Covered?
Most times, the insurance covers every phone on your plan as long as you purchase the phones using your credit card.
You’ll want to check if annual limits apply per phone or across the entire account though.
Also, while every phone might be covered, the primary cardholder will need to start any claims should something happen to the phone.
7. How is Claim Value Determined?
Much like car insurance, you will never get back the full value of your phone should something happen.
Instead, most cards with phone protection have a depreciation formula they use.
They’ll start with the retail value of your phone when purchased then deduct a percentage off the price for each month you’ve owned your phone.
8. How Do Claims Work?
Exact requirements when filing a claim will vary based upon the reason for your claim.
Stolen phone reports will often require a police report while damage reports will require proof of purchase and phone plan payments alongside an estimate of repair or replacement costs.
Once the insurer approves your claim -- and you pay the deductible -- the card issuer will reimburse you for replacement or repair up to the total covered by the plan.
Using the protection available through a credit card can offer substantial savings over carrier or third-party mobile insurance plans.
However, there are not a ton of cards that offer protections and it works a little differently than you might expect. Furthermore, unless you follow the terms exactly, you might find you have no protection at all.
Be sure to document your purchase and fulfill any requirements regarding paying for your phone or service to meet terms.
If someone steals your phone, be sure to report it promptly and be prepared to back up your claims with a police report.
Finally, understand how these services determine the value of your phone and any deductibles required.
This will help to prevent surprises and help you understand the full value of your protection as your phone ages.
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