Insurer may jump in to cover iPhones

AT&T will not insure an iPhone, but insurance company Safeware may start offering policies.

A company that insures laptops and smartphones may save the day for iPhone owners worried about their pricey handsets getting stolen or damaged.

The just-introduced device costs US$499 or $599 depending on storage and has a slippery, rounded design with a glass touchscreen that covers most of its face. Yet AT&T Inc., the exclusive mobile operator for the phone, won't sell insurance for it. And although Apple Inc. offers the AppleCare extended warranty for almost all its hardware products, the plan is not yet available for the iPhone. (Apple says it will start offering AppleCare for the phone some time this month.) Some participants on the cell-phone site HowardForums said they were disappointed those types of coverage weren't available.

Now, a third party is thinking about stepping in. A flood of potential customers have contacted Safeware, The Insurance Agency Inc. about getting their iPhones insured, said Matt Wagner, executive vice president and general counsel of the Columbus, Ohio, company. Safeware has been in business insuring PCs since 1982 and started covering smartphones a few years ago, Wagner said.

Before the iPhone went on sale in the U.S. last Friday, Apple's secrecy made it hard to evaluate, he said.

"Now that it is released, we're kind of scrambling to find out if it's something we want to get into or not," Wagner said. Availability of parts and repair facilities are among the issues the insurer is examining.

Safeware's portable electronics policy covers accidental damage, theft, vandalism, power surges and natural disasters in the U.S. and Canada, according to the company's Web site. Coverage includes both the device and preinstalled software, and on a standard policy there is no deductible. Typical prices were not immediately available.

AT&T prices its policies, provided by insurance company Asurion, at $4.99 per month. But the iPhone is so expensive that insurance for it would be too pricey for AT&T to market to consumers, the carrier said. For the same reason, AT&T won't sell insurance for Palm Inc. Treo, Research in Motion Ltd. BlackBerry and some other high-end handsets. Rival Verizon Wireless Inc., by contrast, will insure any phone it sells. Also working through Asurion, it charges $4.99 per month with a $50 deductible.

The iPhone does come with a one-year Apple warranty against "defects in materials and workmanship under normal use," according to Apple's Web site. AppleCare, when available, will extend that coverage for as long as two additional years. Apple hasn't said how much it will cost. Customers will have to sign up for AppleCare while the initial warranty is still in effect.

To help customers stay connected while the iPhone is being fixed, Apple can provide an AppleCare Service Phone that can be sent from Apple or picked up at the Apple Store. But the loaner doesn't come free: There's a flat $29 "service fee," plus additional charges if the user doesn't return it on time after they get their own phone back. And as a warranty, AppleCare won't get you a new iPhone if yours is damaged by accident or stolen.

Many people wouldn't need to take out a separate policy for an iPhone, according to the Insurance Information Institute. Most homeowner's or renter's policies would cover theft or damage to the phone, even if it were stolen from their car, said Mike Barry, a spokesman for the group. However, Safeware's Wagner said those policies typically don't cover a portable electronic device outside of the owner's home or car.

Ironically, while AT&T won't insure the iPhone because it's too expensive, the Institute thinks the iPhone wouldn't be worth a separate policy because it isn't valuable enough.

"It really wouldn't make much economic sense to have a policy taken out separately for the iPhone," he said.

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