I’ve been trying to decide on finally moving ahead to buy to the iPhone5! Would you believe that as of writing this, I’m still a (not so proud) Blackberry owner? To my defense, it’s provided by my employer free of charge and while there are very few things it does very well, one of those things is providing a very easy to use keyboard. I’ve been annoyed at many other features though, mainly the lack of apps and painful web browsing experience. So I’m finally going ahead and buying the iPhone5 in the coming weeks.
iPhone Insurance Or Not?
One thing that I would not do for sure is taking an extended warranty through a store like Best Buy or Future Shop. I’ve written about this and there’s no way I would change. I would perhaps go for Apple Care or go for some other type of insurance. What type of protection would I be looking for?
-theft or loss insurance
The main factors are:
-the price (obviously!)
-delays in getting a new/replacement phone
-what type of damage is covered
How Much Is It Worth To Me?
Let’s assume that the iPhone is worth $800 and the deductible is $160 (I’ve seen that number in some policies). That means the net value is about $640 if the phone disappears in the first year. Obviously, as time goes by, the value diminishes. Why? Because one year from now, $800 is probably the cost of an iPhone6 with an iPhone5 being worth a bit more than half.
Also, in that first year, most repairs would be included in the Apple guarantee. If I assume that the average value of the iPhone will be $500 over the life of my iPhone policy, the net value if I lost it would be $340 or so. If I assume that I have a 10% chance or so of losing/breaking/getting it stolen, that would place the value of the insurance at $34 or so, or $11-12 per year. Of course, there is more of a chance that I will end up breaking it and needing a repair in the years #2 and #3 but in year #3, I’d probably just upgrade. So how much value can I truly put on that insurance? Not much and there is about a 0% chance that I will get offered a premium anywhere close to that.
How Are They Being Sold?
My guess would be that most people who buy it simply don’t have the time to think about it properly. You buy this device worth $800 and are offered an insurance against losing it that next days. It’s obviously a possible outcome and a painful one to even consider honestly.