Help! I’m having a disconnect with my cell phone insurance

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Ralph Lagergren’s cell phone “protection” won’t protect him when he tries to invoke a buyback clause. Is he out of luck?

Question: I bought an insurance policy for my Verizon phone through ProtectCell two years ago. I didn’t receive any paperwork from the phone re-seller for Verizon, but wrote the information down on my Verizon contract and also in my day planner.

I was told that if I kept the phone in good shape and had no claims that I could basically get back what I had paid in insurance. I bought a protective case and screen protector to ensure I had a chance of getting back the full price of the contract. They stated that at the end of two years I would get 25 percent of the retail value.

When I bought a new phone recently, I called for my buyback and intended to buy a package again from ProtectCell for my new phone. A ProtectCell representative informed me that buybacks were only allowed 30 days past the end of the contract. I hadn’t ever been informed of that. I had been told that at the end of the two-year contract, not before it ended.

ProtectCell claimed it had sent an email, which constituted a contract, stating all these facts. I did not receive any emails from their company. They said I was still bound legally by the contract they sent out.

They basically said, “Sorry you are past your contract date. Is there anything else we can do for you?”

I wouldn’t be upset at all if I had the facts, but their attitude — that no matter what had happened, rules are rules — got me pretty fired up.

I feel this happening on a wide-scale basis that phone companies selling the phones breeze right past the insurance parameters and people are caught without facts. I accept that I should have been more diligent in following up to have proper documentation.

I thought something reasonable would be offering me $100 instead of the $175 instead of lecturing me on the fact that I was stupid because I didn’t go find their email and read it in spam. — Ralph Lagergren, Wichita, Kan.

Answer: ProtectCell is both right and wrong.

It’s right in the sense that your membership has expired and that it owes you nothing. You can review the terms of your agreement — technically, it’s not insurance — on its website (PDF).

But it’s wrong in the sense that neither the Verizon reseller, nor ProtectCell, made any meaningful effort to disclose the terms of your membership. Instead, a sales representative simply gave you verbal assurances that after two years, this plan would allow you to receive 25 percent of the retail value of your phone.

I’m not going to get too much into this, but you really have to do your homework before buying one of these memberships. They might make sense, but as the voiceover guy is fond of mumbling at the end of an ad, some restrictions apply. Or maybe in your case, lots of restrictions.

It is difficult to not get drawn into a broader discussion about the way wireless companies in general operate. I’m looking at a $500 AT&T wireless bill of my own right now, filled with incomprehensible fees, surprise surcharges and “gotchas.”

I could write about wireless companies every week. Don’t tempt me.

Anyway, my point is that ProtectCell and the reseller should have made a much better effort to inform you of the membership restrictions when you signed up for the “policy.” But you should have also made an effort to inform yourself. I mean, doesn’t it strike you as a little weird that no one ever followed up with an actual membership agreement? Next time you fork over $129 for a ProtectCell plan, you might want to get the actual plan and review it.

I contacted ProtectCell on your behalf. A representative phoned you and, according to you, agreed that you hadn’t been given “sufficient information.” ProtectCell will honor its buyback program.

Is cell phone "insurance" worth it?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at . Got a question or comment? You can post it on the new forum.

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  • sirwired

    The poll question could be asked of any insurance. Generally, if you can absorb the loss and don’t believe you are any more likely than anybody else to encounter that risk, you should refuse. Insurance companies are in business to make money and they will do their best to extract some profit in return for absorbing the risk. This applies to phone insurance, medical, trip, car, life, disability, extended warranty, etc.

    And Chris, for goodness sakes, switch over to pre-paid! Generally, if you buy your “refill” PINs online from 3rd-party resellers, the price on the card is what you pay. No fees, surcharges, gotchas, taxes, contracts, or fine print. Even AT&Ts own flagship pre-paid subsidiary, GoPhone, has decent monthly rates. (Especially compared with the actual “out the door” prices for post-paid plans when you take into consideration all the hidden monthly costs of post-paid.)

    Yes, you have to buy your own phone, but there are some really good devices out there these days for not a lot of money (the Moto G LTE is a good example.) If you have a bad time with customer service, simply pick another provider and ride off into the sunset the very next month. (And if you port your number into Google Voice, you won’t even have to do a port when changing providers!)

    There’s all kinds of listings on-line of the different pre-paid providers, their plans, and information on which cell-phone networks they actually use. Speaking on a general basis, pre-paid plans that use AT&T or Verizon networks have the best coverage but are also pricier. If you don’t travel much (which I know doesn’t apply to you Chris) providers that use T-Mobile or Sprint’s networks are cheaper, but their pre-paid networks are very limited outside of metro areas.

    (Speaking for myself, I’m on PagePlus Cellular, (using Verizon towers), paying $40/month out-the-door for unlimited talk/text, 1GB data, and excellent US-based customer service. My phone is a Boost Moto G “flashed” over to Page Plus.)

  • backprop

    AT&T now also owns Cricket, which has very simple pricing :)

  • Blackadar

    Insurance is there to cover large losses that you could otherwise not absorb. Insurance for small losses invariably is not worth the expense long-term versus the risk of loss. There will be individual “winners” by buying small-loss policies, but it’s like Vegas – the odds are with the house (the insurance company) that you’ll lose a lot more than you win.

  • BillCCC

    Insurance is worth it if you provides you with peace of mind. When an economist would agree is another matter.

    As for the complaint, nothing to see here. OP fails to read agreement, complains to Chris when company lives up to its end of the contract, company caves to avoid bad publicity.

  • John Baker

    Wow … I think this is the first time you and I agree completely! Ditto!

  • Don Cheedle

    Insurance seems like a good idea if you purchase an unlocked iphone or similar priced device at full cost rather than a subsidized phone w/ a contract. Also if you are prone to dropping you device in cups, toilets, whatever… maybe throwing it? Losing it? Then sure, That would seem about it.

  • dervin

    I voted yes, I have a squaretrade warranty and made two claims on it. Apple offers an out-of-warranty service for their iPhones where you can replace a broken Iphone for a fraction of the iphone’s retail cost. So for a $99 upfront fee and a $50 deductible ($100 total) I’m able to replace an iphone over the slightest annoying imperfection.

  • emanon256

    I have several friends who have dropped their phones in the toilet, its hard not to laugh. But they all had a good explanation, phone was in their shirt pocket and they leaned over to flush. Ill take them for their word :) Yet often in public restrooms I see people who text while peeing. Just like with driving, It can wait.

  • emanon256

    So was this insurance? Or some pre-paid buy back program? Did it buy the phone back, or just pay his something if he is claim free? I had a friend tell me they bought a policy on their phone that woudl be refunded in full at the end of the term if there was no claim. I wondered how that was possible? The insurance company pays more than they got if there is a claim, and pays what they did get if their isn’t, they can’t be making enough on interest to make money with that model.

    When I was traveling weekly I took out insurance on certain items, but never had to use it. In that case it was worth it for the peace of mind even though I never had to use it. Typically, and now, I don’t get the insurance. I am always careful to protect my devices and use them responsible.

  • FQTVLR

    I took cell phone insurance one time and then realized that what I paid ended up being more than the cost of the phone. So I follow what sirwired has said—if you can absorb the loss then do not get the insurance. Mr. Lagergren fell down on the job for not following up when he did not get the paperwork explaining what he bought. He should have looked at it before he purchased the plan so that he knew exactly what he was buying. Cell phone providers and the insurance they sell are never as frank and forthcoming as they need to be, so customers need all in writing before purchasing. He should have done more, but the company is most at fault here. Hopefully they will provide what they said over the phone.
    And I am shocked at your phone bill Chris. $500 would give me a heart attack.

  • MarkKelling

    Chris mentioned recently that he was in Europe. If he used his cell phone there, that might explain the ridiculously high bill.

    While I agree with the suggestion to have a pre-paid phone, I’m not sure that those work in Europe. Last one I had did not.

  • Dutchess

    It’s not worth it! She likely could have sold back her phone to any number of places or via a private sale and got more money back than this “insurance” program offered and saved herself 2 years of premiums. You’re better to throw $25 a month in a savings account and self-insure for small things like this.

  • Carver Clark Farrow

    Spot on about insurance.

    Consumer reports did an analysis and found that prepaid phones on the majors could be higher than traditional contracts. Who knew.

  • emanon256

    Pre-paid is not for everyone. I did the math, looked at service areas, and looked at data usage. It pays for me to go post paid.

  • Don Cheedle

    HA! Yea, me too. Luckily I have never done it, but I have friends who have told me that story. I did once drop my old Blackberry 8200 (damn I miss that thing) in a cup of beer and it didn’t even flinch. Turned it off, dried it out, came back to life @ 100% functionality. Amazing.

  • Carver Clark Farrow

    This is an amazing bad deal. Just based on what the LW knew at the time of purchase.

    Pay $125 upfront tomaybe get $175 back in two years.

    Suppose:

    ….Any disputes arise
    …Company goes out of business
    …You don’t want a new phone
    …You want to change carriers
    …You ding your phone

    Any “insurance” program such as this one needs to be examined very closely

  • Sam Petersen

    We love our cricket. We have nice smart phones (not the latest and greatest, but they serve our purposes) and for the two of us its $72 a month. Our bill has actually gone down since we first moved over to them

  • DavidYoung2

    As for insurance, I bought my phone with my Amex card and was surprised to learn that Amex does NOT exclude mobile phones from their (1) purchase protection and (2) double warranty period. It makes phone insurance less beneficial since some of the losses are covered anyway.

    I don’t know about other credit card companies, but their own purchase protection policies might make phone insurance obsolete.

  • ShrimpBoy

    “I was told that if I kept the phone in good shape and had no claims that I could basically get back what I had paid in insurance.”

    The turnip truck is missing a load. How can you tell the salesperson is lying to you? Their lips move.

  • Travelnut

    I provided a cell phone (Verizon) for my niece from the ages of 14-18. She was hell on phones. In her case, I got my money’s worth from the cell phone insurance. The poll question should have a “sometimes” option.

  • Carver Clark Farrow

    Was that really necessary?

  • foggybear

    We bought SquareTrade warranties on four laptops that were purchased together. Every computer eventually had problems, and none of the warranties were honored. The only good thing I have to say about SquareTrade is that a supervisor was able to at least refund the warranty price without too much trouble.

  • Freehiker

    It seems that more and more of the complaints here are the same thing; the consumer agrees to the terms until it doesn’t work out in their favor and then they throw a tantrum until they get their way.

    Imagine the world we would have if people held themselves accountable for their own actions. What a place it would be.

  • Mel65

    For us, the insurance seemed to be worth it for my teenage son who went thru a couple of phones in a year, at face value. But, after the second one they said they would no longer cover his line, and since we pay for our phones outright (in order to maintain our grandfathered unlimited data plans on Verizon) and the replacements were used/refurbished phones, we weren’t getting “like for like” and could buy a phone online for not much more than our “deductible” and once you add in the monthly premium, the math stopped making sense. Now I save $40 a month (5 phones at $8 for insurance each) and am ahead of the curve since the only one who ever used the insurance anyway was my son.

  • PsyGuy

    Completly agree with you, except on the issue of the refurbished phone, and not getting “like for like”. Your son broke what was at that point a used phone, and go it replaced with a functioning “used” phone. Sounds pretty like for like to me.

  • PsyGuy

    My company mobile bill in Japan is about $500 a month.

  • PsyGuy

    ” If you have a bad time with customer service”, this is Chris were talking about here, do you really think he (a consumer advocate) suffers poor customer experience???
    They probably have his name on a list of people not to piss off.

  • PsyGuy

    Chris, is your $500 a month bill a family + business plan?

  • LonnieC

    Gee, we’ve had excellent service with Square Trade on two different printers. Both failed, and both warranties were honored quickly and completely (and no, I have absolutely no connection with that company in any way). Sorry you didn’t have the same experience.

  • Mel65

    I know what you’re saying, but after paying $650 for a new phone in August and filinng the claim/getting the refurbished one in September… after slightly less than a month, it just didn’t seem right to get a phone that was older/used/refurbished. Had it been a year later… Oddly, he’s kept THIS phone for a year now….so maybe his irresponsible phase has ended *knock wood*.

  • PsyGuy

    Sounds like a cheap lesson in responsibility to me :)

  • TMMao

    T-Mobile’s prepaid plan didn’t work for my phone in Canada recently, while their postpaid plan worked fine for my spouse. Kept on receiving a message that there were insufficient funds on my account, although it was paid up through the end of the month.

  • TMMao

    SQTR has honored every one of my warranty claims that don’t involve accidental damage, which I chose not to purchase. They even refunded the purchase price of a 3-yr old vacuum cleaner rather than try to repair it.

  • TMMao

    Even though the company is paying, it’s still a good idea to sign up for an int’l voice/text/data plan or buy a prepaid sim card when overseas. Saving the company money may contribute to its success, and thus your job.

  • PsyGuy

    I’m sorry I didn’t mean to be confusing, I live and am based in Tokyo, that’s my average typical charges for my business line.