Let’s face it, cell phones simply do not last forever. They become obsolete, get lost, stolen and sometimes they just break for no reason at all. The big four cell phone providers in the United States offer a “service” which is supposed to help you with this problem called cell-phone insurance. The idea is that if you ever lose or break your cell-phone, you’ll be given another one for free since you have insurance. In this case, the devil is in the details. It might seem like a logical idea, but in reality, it’s a really bad deal. Let’s delve in further.

At most major providers you will pay $4.00 or $5.00 a month for cell-phone insurance. What does that monthly fee get you? Not much at all. If you lose your cell-phone, drop it in some water, or otherwise break it, you’ll have to pay a $40.00 deductible, and after that they won’t even give you a new cell phone. They’ll give you a used one!

Instead of paying a certain amount for a used cell-phone if your breaks, which might or might not happen, here’s a more frugal way to get a new cell phone if your phone does break. Acquire a used phone on the secondary market to use. Lots of people switch cell-phone providers on a regular basis, and chances are someone you know has a cell-phone that they’re not using sitting around that’s going to waste. If you offered them $10.00 for the phone, they’d probably hand it over if you explained the situation. Heck, I’ve got two sitting in my dresser at home. If you’re not sure, just send around an email at work, it’s more than likely someone has a decent cell phone sitting around that they’re not making any good use of. If you don’t know anyone that has a used cell phone, you can pick one up on eBay for a fraction of what you’d pay for a new phone.

If you like to have an expensive smart phone, it’s still probably a better deal for you to just go out and get a used Treo or Blackberry on eBay then to gamble that you’re going to possibly break your cell-phone in the near future.

After you get your used phone, just call up you cell phone provider’s customer service number and tell them that you have a new cell phone and would like to switch your service over, the technical term is an “ESN change.” They’ll ask you a few questions, and will transfer your phone over. Don’t go visit a corporate store, because they’ll most likely try to charge you a fee to do so (Verizon does this), but if you call the customer service number, they’ll likely do it for free.

You’re going to be presented a smooth and persuading argument as to why cell-phone insurance makes perfect sense when you’re in the store signing up for a new plan, but don’t fall for it. The only people that come out ahead in this game are the people selling the protection plan.

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