Home insurance and your cell phone: two things you don’t want to live without. With top-of-the-line phones approaching $2,000, more people want protection for their devices. That goes for laptops, tablet, smartwatches, and all sorts of other pricey tech, too. But it’s not easy to parse the different coverage options available—insurance, warranty, guarantee… where do you start?
Here’s everything you need to know about insuring your personal electronics.
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You’ve just bought a new cell phone. It’s the latest top-of-the-range model and cost more than you’d care to admit. So, how do you protect it?
Chances are, during the purchase, you were offered some form of extra protection. Phrases like “extended warranty,” “protection plan” and “third-party insurance” are common, but often misunderstood. Moreover, the type of protection you require depends upon the specific type of loss you’re worried about.
So, let’s take a look at the various options available to you, and what they cover.
Many people confuse the terms warranty and guarantee, and it’s easy to see why. Put simply, a warranty is a written promise. A guarantee is the details of that promise as contained within the warranty.
The word “warranty” has several definitions depending on the context. For example, in the insurance industry, it’s an assurance that certain material facts are correct, or that certain conditions will be fulfilled.
In retail, however, the definition of a warranty is more like an assurance of quality. Think of a warranty as a promise from the manufacturer that its product meets a certain standard. If the product fails within a given timeframe, the manufacturer agrees to repair or replace the product if it can be shown that the issue was not caused by the user.
Warranties are issued by the manufacturer and are often limited in scope and time. You may find that your new phone comes with a 1-year warranty that excludes breakage to the screen, for example. So, if your phone suddenly stops charging, your laptop won’t turn on, or your smartwatch has a glitch, the manufacturer may take responsibility. For them to do so, your device must have come with a warranty, and the warranty must still be valid. Plus, you may have to prove that you didn’t cause the issue with your device.
This brings us to extended warranties offered specifically by the manufacturer—think AppleCare or Samsung Premium Care.
Essentially, these plans prolong the duration of the warranty for your device. Some manufacturers offer several levels of protection, but even the most comprehensive packages may not protect against damage caused by negligence. You can find more supporting research for warranties over at Cellphones.ca.
Protection plans are usually offered through your service provider: Rogers, Bell, Telus, and so on.
For a monthly fee, these plans protect against accidental damage caused to your device. So, if your phone is lost or stolen, you’ll be able to replace it with a new one. Beware, though, there may be a catch: Many protection plans limit the number of claims you can make. And be sure to read the agreement thoroughly; you may find that you need to pay a deductible of several hundred dollars in the event you’re forced to make a claim.
Most home insurance policies include coverage for personal possessions. Cell phones, laptops and (some) smartwatches are usually included. So, if you have home insurance, you probably already have coverage for your devices under the policy.
The bad news is that when you make a claim with your home insurance provider, you’ll probably need to pay a deductible. Your policy deductible may be high enough that making a claim for just one cell phone isn’t worth it. Plus, some providers place a limit on the amount they’ll pay out for electronics. In these cases, it may not make financial sense to file a home insurance claim.
So, knowing the different types of coverage available for your smartphone, which do you actually need?
Unfortunately, there’s no one-size-fits-all answer. It depends what you’re willing to pay for out of your own pocket. Warranties, protection plans, and home insurance cover different events.
A manufacturer warranty is important, because it will help you out in case there’s a defect with the phone. Home insurance does not cover mechanical defects or breakdowns. On the other hand, the manufacturer warranty won’t help you if your phone is stolen, but your home insurance probably would.
A major concern with handheld devices is damage from drops, scratches, or liquids. Once again, the warranty won’t help here. A protection plan might, depending on the plan. Same with home insurance: plenty of accidental damage would fall under your home insurance coverage.
If you already have an active home insurance policy (and it adequately covers electronics), and your phone is under warranty, you may not need an extra protection plan. To be sure, you would need to compare your specific insurance policy with the options available from protection plans—not to mention the prices.
At Square One, we understand the importance of electronics in the modern world. We treat your phone and laptop just the same as the rest of your personal property, with no sublimits for electronics. You can select your own limit for personal property, with a wide range of options to cater to all lifestyles.
The policies that we offer also insure your property on a replacement cost basis, rather than cash value. Simply speaking, this means that if your phone is stolen, we’ll replace it with a new one of similar kind and quality—no deductions for depreciation.
You will still need to pay a deductible, though. But, with Square One, even this is easy; you can select a deductible that you’re comfortable with when you buy a policy.
And the best part? In addition to personal property coverage, you’ll also receive Square One’s comprehensive protection for your home and your liability exposures.
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That depends on the watch, and the policy. One provider may consider a smartwatch jewellery, another may consider it an electronic device. Your smartwatch is subject to the policy limits and coverages based on how your insurer classifies it.
At Square One, we classify any device that is used to adorn the body as jewellery—including all smartwatches. We don’t include jewellery coverage by default, but you can easily add it to your policy if you need it. Note that simple devices that are worn around the wrist (such as a Fitbit or a step tracker) are classified as Personal Property, and therefore automatically included under your Personal Property coverage.
If your children are still financially dependent upon you for their well-being, they’re probably covered under your policy. So, if they’re living away from home while studying at university, but you still pay their bills, chances are, they’re covered. However, always be sure to check with your home insurance provider. Square One’s policies will automatically extend to dependent children at school, but not all home insurance providers are guaranteed to do the same.
Most of the time yes, provided you have indicated you use the laptop for work and your insurer has okayed it.
Most people who use a laptop owned by their employer won’t need to buy extra insurance, even if they bring it home with them each night. In these circumstances, the employer is responsible for insuring their own property. However, if you’ve paid for the computer yourself, you are responsible for it. In any case, a personal property insurance policy will only respond to a loss if the policy specifically includes items used for business. If it doesn’t automatically include items used for business, this is usually available at an added cost. Learn more on how we assist customers with home-based businesses.
Want to learn more? Visit our Home Insurance Basics resource centre for dozens of helpful articles to guide you through the ins and outs of home insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Rena Novotny
Rena's 23-year career started as an independent adjuster where she specialized in complex property, liability and special risk loss. As a branch manager, Rena hired, trained, mentored and coached several adjusters. She continues part-time post-graduate studies in neuro-psychology and traumatization, learning how both may impact the insured's engagement on catastrophic claims. Rena has a MA (Conflict Analysis and Management), CRM, CIP, and holds a level 3 adjusting license.
About the expert: Stefan Tirschler
Stefan is responsible for underwriting leadership, market expansion, and product research and development for Square One's operations. Stefan has earned his Fellow Chartered Insurance Professional designation, and maintains a level 2 general insurance license in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stefan is also an Education Committee member and CIP/GIE instructor for the Insurance Institute of Canada.
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