Insurance Companies Are Doing It Wrong

July 01, 2015

My dad is a blue collar guy.  He owns a few car washes and is still very involved in the day-to-day. Meaning that he will get in there and clean cars himself once in a while.  He's like a hispanic Clark Griswald and completely out of it most of the time.  No surprise that I got a phone call recently that he lost his phone.  Probably somewhere in the water at the car wash.  Being that I own a phone rental business, he didn't go long without a phone.  

But I decided to see what would happen if I wasn't there to help him out.  If he had to go through insurance.

That's where the image above comes in.  My dad had a 16GB iPhone 5.  He was using a phone that came out almost 3 years ago. So if he actually had insurance, he would have to pay a $200 deductible to replace his phone.  You can already see my point about insurance deductibles.  Stay with me here, cause you also need to keep in mind that the deductible would have been in addition to the monthly payments (about $11) he would have paid since he first got the phone.  A quick peak at some used phone resale sites shows that an iPhone 5 goes for about $200.  To put it another way, the deductible to replace an iPhone 6 is also $200.  

Good new?!

Why is the insurance cost to replace an iPhone 5 the same as replacing an iPhone 6?  Doesn't make sense right?

Another tidbit that not many people know is that the replacement iPhone 5 will most likely be a refurbished item, sometimes with non-Apple parts.  The iPhone 6 on the other hand will probably be brand new, because there just haven't been enough returned to the insurance company for repairs.

I'm not saying insurance is the worst or isn't useful.  I'm saying that they are out of touch.  Insurance is great if you lose your phone a few months after getting it, but doesn't make sense a year and a half later and you're close to upgrade time.  The problem is that 90% of people with insurance may not even think twice about these costs because they don't think there is another choice.

That is why Phone Bum is here, to offer everyone an alternative to deductibles that don't make sense. An alternative to wasting an upgrade when the newest Samsung Galaxy phone is coming out in two months.  An alternative to paying $120+ to fix a cracked screen when you plan on replacing it in a couple of months anyway when the iPhone 6S comes out.

Oh and by the way, we ended up finding my dad's phone a few days later. 

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