Telecom Expense Management Blog

In my last post on this subject, I provided some background information on wireless handset insurance and discussed the hidden terms and conditions associated with these products that make them unattractive.

Now, because we are in wireless expense management business, let’s do some math. The biggest risk we can manage with Handset Insurance is the cost of a new phone with no upgrade; let’s say that’s $250. To manage that risk, we pay an average monthly premium of $6 per month and a deductible of $89 in the event of a loss. After a device life of 12 months, the net value of the risk we have managed is marginal;  $250-((12*$6) + $89) or just $89. Assuming a device life of 24 months, the net value of handset insurance is even less attractive; as $250-((24*$6) + $89) is just $17.

There’s an old truism that states one should buy insurance to protect against catastrophic loss and self insure less significant risks. If spending $250 to replace a smartphone represents a potentially catastrophic loss to you, go ahead and buy wireless handset insurance. For most business wireless expense managers, replacing a smartphone is a nominal risk that makes better financial sense to self insure.