AppleCare is NOT Insurance, Protect Your iPhone w/ Insurance

I can’t remember the last time I walked into an Apple store and didn’t hear someone referring to AppleCare as insurance. The Verizon iPhone will likely bring millions of users into the Apple camp for the first time and I think a lot of people overrate and misunderstand AppleCare. While AppleCare might be a good choice for some people who need some extra hand holding or who do not buy their gadgets with a credit card that automatically doubles warranties, AppleCare is not insurance. If you’re looking for insurance for your iPhone…go buy insurance.

AppleCare might sound appealing, but if you want to actually protect your new iPhone from risks like theft and breakage, you’ll want to purchase a policy from Worth Avenue Group or Squaretrade . Josh Smith listed five reasons why insurance beats AppleCare over at

AppleCare is a particularly bad buy for tech savvy shoppers with a decent credit card. Many credit card issuers tack on perks like purchase protection, but relatively few consumers ever take advantage of them. If you’re not aware of such perks, call your credit card company and ask about the details. American Express, the card I chose to purchase all of my gadgets with, automatically covers damage and theft within the first 90 days, up to $1,000. American Express also automatically doubles the warranty of just about anything. If you buy a new Verizon iPhone 4 with an Amex card, you’re essentially paying $69 for a year and nine months of phone support.

I purchased a MacBook Pro about three years ago that fell victim to an iced tea my wife knocked over just a week after I bought it. I took the MacBook pro apart and let it dry overnight, but brought it to the Apple store to have it checked out. A few drops of liquid got in the LCD and the motherboard apparently doesn’t like liquid. The repair quote was $1,050….over half of the purchase price. Having a few dark stains on my display was annoying, but not $1,000 annoying. The circuits were working just fine too, but Apple warned that things could degrade over time. I called Amex to see if they could help and explained that I wasn’t even sure if I’d go through with the costly repair. They almost immediately issued a $1,000 credit to my account and apologized that they couldn’t cover the last $50.  The rep explained that they’d pay even if I didn’t get it repaired because the MacBook had lost value.

If you have a homeowner’s or renter’s insurance policy, you should give your agent a call and see if they cover smartphones. Only a couple of insurance companies are wising up and treating iPhones like any other item of value and offering insurance against loss. One agent I talked to said that her company offers insurance iPhone insurance to differentiate it from the competition and as a loss leader to get people to switch their home/auto policies over.

Before you buy AppleCare for your iPhone, weigh your options and don’t get sucked into the “it’s only $69, which is like $3 a month…” line.

Image via DaveOnFlickr