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Is opting for mobile insurance more cost-effective than an extended warranty? Image Credit: Shutterstock

Dubai: When figuring out whether you need to insure or purchase an extended warranty for your new phone, it’s vital to decide between the two based on the costs involved.

But what is the difference between cell phone insurance and an extended warranty? Knowing that can help you decide between the budget friendlier alternative of the two.

Unexpected cell phone repairs or replacements can leave you spending several hundred dirhams, but the right cellphone insurance policy can help make it more affordable.

When purchasing a cellphone insurance policy, consumers will pay a monthly or annual premium, typically between Dh20 and Dh80 a month.

What does a cell phone insurance entail?
Cell phone insurance is a protection plan for your phone that covers situations where it's lost, stolen or damaged.

With most insurance programs, you pay month-to-month as long as your coverage continues. If you decide to discontinue your coverage, you can cancel at any time.

If the device is damaged, lost, or stolen, the insurer will be able to repair or replace it for a fraction of the market value by paying a deductible.

Extended or manufacturer's warranty?

A phone manufacturer's warranty is when you buy a device, and the manufacturer issues a promise to repair or replace your purchase if necessary – within a specific timeframe.

For example, if you were to buy a new phone, the manufacturer's warranty is usually for one year starting after the purchase date – depending on the manufacturer.

What then is an extended warranty? An extended warranty allows you to receive the same amount of coverage issued by the manufacturer for a longer period of time.

Typically, you pay upfront (at the time of purchase) for 1 or 2 years of additional coverage and may be eligible for additional fees later if you need service.

A phone manufacturer's warranty is when you buy a device, and the manufacturer issues a promise to repair or replace your purchase if necessary – within a specific timeframe.

What does an extended warranty cover?

“In most cases, phone extended warranties cover malfunctions like electrical failures and mechanical failures from a manufacturing defect after the manufacturer's warranty expires,” said UK-based tech analyst Mordi McKellum.

“To put it simply, it covers situations where the phone does not fulfill its intended purpose. It’s for that reason, extended warranties do not cover lost or stolen phones. Similar to a warranty, cell phone insurance covers electrical and mechanical failures – but that's where the similarities end.”

Cell phone insurance also covers if your phone is lost, stolen or damaged — even liquid damage. Many phone insurance policies offer similar coverage, but it’s important to thoroughly review each provider and policy before making a decision.

“The best policies are cost-effective, with low deductibles, making it easy to file a claim. Factors like discounts, multi-device options, and customer reviews can also be useful when selecting a phone insurance provider,” McKellum added.

Many credit cards offer cell phone insurance

Cell phone insurance is a built-in benefit offered by many credit cards, including some without an annual fee.

“If you’re paying extra for cell phone insurance or you don’t have coverage yet, consider getting one of these cards so you can protect your cell phone from damage or theft for no additional cost,” noted McKellum.

“This isn’t just a perk you’ll find with premium credit cards—some cards with no or low annual fees also offer it. This coverage can help you pay for certain repairs.”

However, you will need to file a claim to recover an expenses, typically within 60 days of the incident. Theft claims also typically require a police report to be filed within 48 hours of the theft.

As a general rule, cell phone insurance offered through a credit card will not cover the loss of a cell phone. If you’re worried that you might simply lose track of your phone, McKellum suggested considering other cell phone insurance options that will cover loss in addition to damage and theft.

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Is it worth it to get phone insurance as opposed to a warranty?

Verdict: Is it worth it to get phone insurance as opposed to a warranty?

“While you can also buy insurance from your phone manufacturer, their plans might come with technical support by phone, in a store, or through online chat. Buying insurance from an independent insurer gives you more flexibility,” explained UAE-based independent tech consultant Sadiq Sharif.

“When it comes to phone insurance, as soon as your phone is lost, damaged or stolen, you can make a claim on your phone insurance – no matter how long you've had the policy. The insurance team will undertake necessary checks to ensure that the claim is valid.”

Cellphone insurance may be worth it if the cost of replacing your phone would put a strain on your finances. Moreover, with the price tag on the latest smartphones considerably high, that's not a rare situation. Insurance might help cover you if your phone is lost or stolen, or if it's accidentally damaged.

If you make a claim, your insurance company will try to give you a replacement of the same make and model — but it doesn’t have to. “Most insurance providers cap your claims at two in a 12-month time frame. This can be a problem for the particularly accident-prone,” Sharif added.

“The trouble is, those are the people for whom cell phone insurance makes the most sense. If you're rough with your phone, cell phone insurance is a wise investment.”