Telecom Expense Management Blog

Almost everyone has had the experience of buying an expensive piece of technology like a smart phone, laptop or even a refrigerator and being asked at checkout if we would like to buy some sort of insurance for our new purchase. The sales rep who is working with us can earn a big commission on this “upsell” and may pressure us into making a snap decision. We don’t have a lot of information about the potential risks to our new purchase or the economic value of those risks. We might be nervous about how our new acquisition is going to work out and the sales rep is offering an inexpensive-sounding solution to assuage our anxiety. It’s tempting to buy handset insurance for wireless devices, but it’s almost never a good deal, especially not for company liable mobile devices that are part of a wireless expense management program.

Before we dig into the economics, let’s review some background information about wireless handset insurance. The top four US wireless providers all have different names for the product, but the underlining carrier is always the same: Asurion. This company stays under the radar but insures millions of wireless handsets around the world. Wireless carriers charge between $5 to $12 per month for handset insurance, depending on the model of phone and the level of coverage. Insured users are covered if their phone is lost, damaged, or destroyed. Wireless carriers tend not to over advertise two important aspects of the wireless handset insurance coverage they offer. First, many claims are subject to a substantial deductible, sometimes as high as $89. Secondly, carriers fulfill customer claims with used, refurbished equipment.  The average market retail price for a used, refurbished handset is $100.

In my next post on the subject of wireless expense management, I’ll do the analysis to show the poor expected net value of buying wireless handset insurance.