When you purchase a new mobile phone, the sales person asks if you would like to purchase a protection plan, phone insurance policy or extended warranty service for your device. It’s tempting. After all, it only starts around £5 per month, and if your phone is lost, stolen or damaged, you will be covered. Many users sign up for the service, but is it worth it?

Often times, it isn’t. A new phone is covered by a manufacturer’s warranty, which covers equipment that is defective or malfunctioning due to its make. Any damage you do to your mobile or smartphone will not be covered by the manufacturer’s warning. However, the catch-phrase promise of a warranty plan often does not jive with what it actually provides. Most consumer groups advise against protection plans because they often come with conditions. The replacement phone is usually a refurbished used model, rather than a new one. There is also usually a deductible for a replacement, which can run up to £50 or more. While protection plans may be useful for the accident prone, they offer no substantial benefit for those who take care of their phones properly. Still, those who buy expensive personal digital assistant or smartphones may be inclined to have a refurbished back-up in case of emergency.

While the term insurance is applied to these plans, they do not work in the manner that may be expected. You absolutely will not be reimbursed for your phone. The only recompense you will receive is a new phone. Protection plans only replace your phone with an identical or lesser model. If your provider happens to be out of the phone under your extended warranty, you may be placed on a waiting list, or sent a model with fewer features. The provider of an extended warranty is a third-party entity, which means that your wireless company may be helpless to assist you in disputes with your coverage claims.

There are a number of restrictions to the types of damage that protection plans will cover, as well. Some refuse to replace phones due to

“normal wear and tear”

…or cracked display screens, unless the damage interferes with the function of the device. It is important to review the actual policy, rather than the brochure available at the sales counter. Take it home to review it thoroughly. Typically, mobile providers give a grace period of two to four weeks for opting in to a protection plan.

The truth is that if the protection plan is only going to replace your mobile with a used phone, you can usually find a better deal online. If it takes you two months to completely destroy a mobile phone, or if you have the most expensive smartphone on the market, maybe a protection plan is the right choice for you. Otherwise, you may save a great deal of money by opting out of the monthly payments and deductible by pocketing the extra £5 a month and replacing the phone when the unthinkable happens.

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