Stolen iPhone? Not Our Problem, Says Cellphone Insurance Company

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It’s all in the fine print. And sometimes it’s buried eight pages into the fine print, in an absurd location and written in language that is next to impossible to decipher.

That’s the lesson in the story of a California woman who purchased AT&T Mobile Insurance for $6.99 a month to safeguard her new iPhone 5S . She shared her story with Los Angeles Times consumer columnist David Lazarus.

The insurance was supposed to cover phone loss, theft or accidental damage. But after her iPhone was stolen during a trip to Indonesia, her claim to Asurion, AT&T’s phone insurance provider, was denied three times.

Why was the claim rejected? If you read the contract’s terms and conditions, it seems clear that the phone would be covered. Lazurus wrote:

It’s not until you get to the eighth page, under “definitions,” that Asurion reveals that for a phone to be considered “covered property,” it must be “actively registered on the service provider’s network and for which airtime has been logged after enrollment.”

Say what? Lazarus explains:

What it means, according to Bettie Colombo, an Asurion spokeswoman, is that your phone won’t be considered insured until you perform some wireless activity on your carrier’s network after you’ve signed up for coverage.

In other words, because the woman was in Indonesia when she signed up for the coverage and her phone was stolen there, the coverage didn’t apply.

Lazarus says, “To stash something so important under ‘definitions’ — the contract’s glossary, for goodness’ sake — and to use such impenetrable language seem deceptive at best and fraudulent at worst.”

Asurion is the cellphone insurance provider for the top four wireless carriers in the U.S. Is cellphone insurance worth the cost? Consumer Reports says it’s usually not, and we agree. “Instead, keep your old phone after you upgrade so that you can reactivate it if necessary,” CR says.

Do you have cellphone insurance? How has it worked out for you? Please share your experiences below or on our Facebook page.

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Comments & discussion

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  • matthewkmiller

    I read this story expecting to find an article about wrong-doing by an insurance company. Instead, I find a story about an insurance company that wants proof that you signed up for their insurance before the phone was stolen. Just like an automobile insurance policy, the insurance agent wants to see your vehicle before covering it for damage, or a homeowner’s policy where the insurance company wants to come by your home before it’s covered. All they wanted was for the insured to connect their phone to the AT&T network to prove it was under their control before they covered it for theft. Doesn’t seem too much of a stretch to me. For all the insurance company knew, the phone was stolen in Indonesia and when the owner discovered it was stolen, they took out insurance for it, after it was stolen. Sounds like attempted insurance fraud if you ask me.

  • Joseph Freitas

    Actually Matt there is a limited window usually a few days after you get the phone for your to sign up for the insurance. You can’t for instance use the phone for 2 weeks, or a year and then get the insurance like you can a car.