Upcoming changes in smartphone insurance prompt users to ask what’s the point of it

To insure or not to insure your most precious device?

While phone insurance plans have been a thing for a while now, I never thought about it until the day when I accidentally dropped my brand new smartphone and tried to grab it from beneath the car before it started moving.

Apparently, I’m not the only one who (still) doesn’t have insurance. A recent report on the transformation of mobile protection by SquareTrade, an extended warranty service provider, reveals that while we place great importance on our devices, we don’t do much when it comes to their protection. The good news is that the situation might change in the future.

How did we manage to put so much trust into our devices?

It’s no surprise that we rely heavily on our smartphones today. It’s been claimed that almost 80% of users turn to technology when doing daily activities.

The extensive use of smartphones developed over time for several reasons. First, manufacturers and operators have developed new financial models that allow users to purchase what’s been considered a premium device.

One popular example of a financial model is Apple’s iPhone upgrade program which allows users to renew their device every year through monthly installments.

To make smartphones more accessible, manufacturers have also been working on making affordable alternatives to these premium mobile devices, further expanding the smartphone market.

At the same time, trends in smartphone manufacturing show that the industry that once provided users with frequent upgrades is now slowing down. Users are now equipped with mobile devices that are much more capable and durable, so they tend to keep them for longer.

On average, users keep their smartphones for two to three years. In 2023, the smartphone upgrade cycle reached three and a half years.

Despite a slow-down in manufacturing, the smartphone industry is still making some changes. For example, it has been reported that by 2028, our mobile phone display could be equipped with nano-coating which would enable our phones to self-repair small chips and scratches.

When it comes to subscription-based services in the future, device-as-a-service (DaaS) offerings not only allow users to upgrade their devices and offer insurance for a device, but also expand this coverage for an “entire digital ecosystem.”

What devices actually mean to their owners

The loss of a physical device can easily create panic for many people who count on their smartphones for almost everything – not only getting calls or sending messages but also making payments or retrieving various tickets and passes. The use of a phone has been extended to the point where we can use it to verify our identity, as Apple is already allowing some of its users to add personal documents such as their driver’s licence or ID.

It becomes even clearer how important our devices are to us when they get lost or stolen.

Even though we live in times where smartphones could be easily retraceable, this doesn’t deter thieves from stealing devices. In fact, it has been reported that smartphone thefts have been rising worldwide, with London becoming “the phone-snatching capital of Europe,” according to a report.

Having a smartphone stolen today is even more dangerous than it was 20 years ago because so much information about us is stored on it. If malicious parties get access to this data, it can cause immense danger. It’s also been revealed that many users have an “emotional attachment” to their devices because this is where they store their memories.

A particular case from last year showed how a stolen data can prompt thefts of physical goods. A new “trend” has taken place among thieves who would use leacked tracking data to steal unattended Apple products that were left by delivery workers.

Concerns people have when they get their phone stolen

• Potential risks related to bank and financial services
• Loss of photos and videos
• Identity threats
• Loss of personal information

Why won’t people insure their smartphones?

What’s interesting is that while many of us can’t imagine a day without a phone, 72% of surveyed consumers in the UK admitted not having insurance for their smartphones.

Some users have also admitted that they wouldn’t know what to do in case their smartphone gets stolen and those who are insured are not sure what it covers or how the whole process is supposed to work.

The report suggests that only 18% of respondents from those who have a smartphone protection plan fully understand what its for.

“What is the point of phone insurance?,” asked one user online, who was confused by the fact that they’ve been paying for insurance, but were asked to pay the full amount for the replacement.

This prompted a discussion that showed how few people actually know how insurance works.

While some users just don’t see the point of getting insurance, believing that nothing too serious can happen to their devices, some people also just don’t believe in paying extra for a service that they probably won't use.

“Why are people so willing to protect the scam that is insurance,” asked another user online. “[...] Millions of people pay insurance and never pay out a single dollar. [...] When you sell your house you should be entitled to 50% of the money paid out over the life of the policy. Period.”

Upcoming changes in insurance coverage

It’s been estimated that by 2030, the mobile protection focus will be shifting to creating a “consumer-centric protection plan” which will focus not only on a device’s hardware but also on users' data protection.

For this to happen, insurers, manufacturers, and regulators will have to come up with unified solutions that would adapt to users' extensive use of digital devices. The report reveals that such union could turn into Protection Hubs that provide users with “device management, protection, cybersecurity, and support.”

Insurers are also expected to provide an all-in-one protection plans that cover everything – from screen repairs to data recovery.