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Innovations and Payment Systems

Cellphone insurance is little-known perk with some credit cards

Summary

A handful of credit cards offer cellphone protection covering loss or damage. Policy details and exclusions vary, but, in general, you must use your credit card that includes the coverage to pay your cellphone service provider’s bill.

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When your cellphone is lost, stolen or just stops connecting to the world, you’ll probably feel a little down on your luck.

 Fortunately, a handful of credit cards offer built-in cellphone insurance, giving you a valuable financial lifeline when that all-important handheld device needs replacing.

This rare credit card benefit — one that many cardholders aren’t even aware of — can be valuable if your cellphone is stolen, damaged or needs replacement. In 2013, the average price of a smartphone in North America was $531, which increased to $567 in 2017 according to Statista. The new iPhone X which costs around $1,000 has pulled up the entire average for that product category. Considering this cost increase, insurance can be a pretty worthwhile safety net for most Americans to have.

The cellphone insurance perk

Dakota McKinnon, a public relations professional in Las Vegas, has two Wells Fargo consumer credit cards – the Wells Fargo Propel from American Express and the Wells Fargo Rewards card. Both come with cellphone insurance — but McKinnon simply wasn’t aware of this fact.

 Had he known of the perk, Dakota says he would have already leveraged its benefits — multiple times, too.

 “Do you know how many damaged iPhones I could have had replaced through the incentive? Roughly five,” McKinnon says. “I have been using iPhones since 2009 when the iPhone 3G was released. If I would have known about this incentive back in my college days, I probably would have been more inclined to use my credit card more advantageously.”

What cards offer cellphone insurance?

Not all credit cards offer cellphone insurance. In fact, the options are pretty limited. But some cover up to $1,000 worth of damage for each claim.

 Here are the credit cards currently offering some form of cellphone insurance:

CardCoverageEarn rate on phone billExclusions
Barclays

Uber Visa Card

Up to $600 per claim

$1200 maximum per year

$25 deductible

1% cash backLost phones
U.S. Bank

Visa Platinum Card

Up to $600 per claim

$1200 maximum per year

$25 deductible

NoneCosmetic damage

Lost phones

Electronic failure

Phones that are rented, borrowed or part of a prepaid plan

First Citizens

Cash Back Rewards Visa Card

Up to $500 per claim

$1000 maximum per year

$50 deductible

1% cash backLost Phones

Phones that are rented, borrowed or part of a prepaid plan

Chase

Ink Business Preferred Card

Up to $600 per claim

$1800 maximum per year

$100 deductible

3x Chase Ultimate Reward Points per dollarLost phones
Citi 

Citi Prestige Travel Rewards Card

Up to $1000 per claim

$1500 maximum per year

$50 deductible

1 point per dollarCosmetic damage

Lost phones

What’s covered by cellphone insurance?

Most cellphone insurance offerings cover phones that are either stolen or damaged (and unusable as a result.)

Some exceptions to these rules might include:

  • Phones that are stolen from checked luggage during travel
  • Phones that disappear without reason
  • Damage caused by normal wear and tear, flooding or natural disaster
  • Damage caused by “war, invasion, rebellion or insurrection”
  •  Cosmetic damage that doesn’t impact the phone’s usability

The majority of policies do not cover lost phones. 

Other ways to protect your cellphone

You can also secure cellphone insurance through your service carrier. AT&T, for example, offers several forms of protection, including its basic mobile insurance and its multi-device protection pack. Verizon offers similar programs, as does Apple (via AppleCare) if you own an iPhone. Though these protection plans come with monthly and annual fees, you may be able to use reward-earning credit cards to offset these costs. 

Here’s how to do it:

  • Find and apply for a reward-earning credit card. One that offers cash back on purchases is ideal.
  • Use this card to pay your cellphone bill every month. You might even consider using the card for other bills you have since you’ll get cash back for every dollar you spend on it.
  • Cash in on these rewards. Transfer those rewards to your checking or savings account to offset the costs of insurance.

Let’s look at an example: Say you’re using Verizon’s basic insurance, which starts at $12 per month. If the card you’re using earns $3 for every $100 spent, then you’ll earn $6 every month on that $200 mobile bill. This essentially cuts your cost of mobile insurance down to just $6 per month, or $72 per year. 

Is this investment worth it? That depends on how much it would cost you to repair or replace your device. If you have an $800 new-model iPhone, $72 (plus any deductible) is a no-brainer compared to those costs. However, if you’ve got an older phone that’s not worth as much, the benefits might not be as substantial.

Cellphone insurance is ‘a big draw’

Harry Campbell, founder and CEO of TheRideShareGuy.com, a blog and podcast geared toward ride-hailing drivers, says he knows of many drivers who pay for cellphone insurance and likely would benefit from the Uber card’s free insurance, namely because a driver can’t do the job without a cellphone.

“The cellphone insurance is definitely a big draw of the card, as it’s one of the only no-annual-fee cards I know of that offers this benefit,” Campbell says. 

The Wells Fargo Propel American Express® card and the Wells Fargo Cash Wise Visa® Card are other no-annual-fee cards offering cellphone insurance. 

Should you get a card with cellphone insurance?

Is free cellphone insurance enough of a draw to steer you toward one credit card over another? Probably not.

As Campbell points out, getting cellphone insurance for free is “a nice benefit,” but the yearly value you gain from the perk might not be worth it if you’re paying a high annual fee or carrying a balance and paying sky-high interest charges.

Rather than letting cellphone protection perks guide your card choices, evaluate a card’s rewards, its fee structure, the APR and its full range of benefits. Cellphone insurance is certainly nice to have when and if you need it; just make sure the costs of the card don’t outweigh its value in the long term.

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Credit Card Rate Report Updated: September 11th, 2019
Business
15.45%
Airline
17.38%
Cash Back
17.53%
Reward
17.40%
Student
17.58%

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