Thinking of getting AppleCare+ for your next iPhone? Think again.

Back in 2014, I strongly recommended against AppleCare+. Following my own advice, I skipped getting it when I upgraded to an iPhone 6s this past fall.

Last month, my decision collided with a worst-case-scenario accident to my phone. This gave me a “real-life” opportunity to assess the financial wisdom of my choice. As it turned out, the accident, while unfortunate, only served to reinforce that I had chosen wisely.

At the time, I had no protective case on my iPhone (a decision I made for aesthetic reasons). While the wisdom of “going naked” can be debated, that’s a separate matter from the AppleCare+ one.

On the fateful day, while taking the iPhone out of my pocket, it slipped through my hand and dropped to a concrete sidewalk. Upon examining the phone, I was relieved to see that the screen was still intact and all functions were working. I had dodged a bullet. Or so I thought.

I was wrong. A day later, I noticed that the protruding sapphire cover over the camera lens, that little piece that annoyingly sticks out from the back of the phone, had cracked. I could still take photos but, under many lighting conditions, the crack resulted in significant flaring visible in photos. Not good. I immediately made an appointment with the Genius Bar at my local Apple Store to see what could be done.

As I had anticipated, the news was bad. The Apple Genius informed me that, despite what might seem minimal damage, there was no way to repair it. My only option was to get a replacement phone. As accidental damage is not covered by the standard warranty (which was still in effect, as my iPhone was less than a year old), the replacement would cost me $300.

Ugh! Feeling that I didn’t have much choice, I handed over the cash and walked out with a new iPhone. As a bonus, the employee threw in a case for free.

At this point, I can hear at least some readers chiding: “Hah! Now I bet you wish you had purchased AppleCare+.”

Nope. While I wasn’t happy to shell out $300, I did so knowing that I was still ahead of the game. How so? Here’s how:

AppleCare+ for the iPhone 6s costs $129. Even had I paid for this coverage, I would still have to pay an additional $99 (accident coverage service fee) to get a replacement phone. That adds up to $228. In other words, ignoring any sales tax issues, not having AppleCare+ cost me only $72.

“Okay,” you may counter, “You didn’t lose $300. But you still lost $72. That’s still a loss. Doesn’t that make AppleCare+ worth getting in the end?”

The answer remains no. That’s because assessing my true cost involves more than simply looking at this incident in isolation. The question is not: “Would AppleCare+ have saved me money this one time?” Rather it is: “Does getting AppleCare+ save me money in the long run?” This requires estimating how often I expect to to damage my iPhone over the course of several years. This can be tricky to determine, as it involves making probability judgments. Just as with predicting election results, there is a margin of error involved. Still, reasonable judgments can be made.

For the sake of argument, let’s say I get a new iPhone every two years. Let’s also say that I expect to damage my phone once every 4 years on average. [In reality, I’m more careful than that. In fact, prior to this incident, I’d never had any accidental damage to any of my iPhones — going back to 2007. So I’m actually stacking the numbers against me here.] Assuming I get AppleCare+ during this four year period, I will have paid $129 x 2 (for AppleCare+ for each phone) and $99 for the damage replacement phone — for a total of $357. That’s $57 more than if I had skipped AppleCare+ and just paid the $300 for a lone replacement. [Note: If all you need is a screen repair, rather than a replacement phone, the downside of AppleCare+ is even greater.]

In my particular case, given that I had never purchased AppleCare for any of my iPhones and that this was the first time I ever paid for a replacement iPhone, I was clearly way ahead of the game — by much more than $57.

Moving beyond the cost of damage replacement…

AppleCare+ does add a second year of standard warranty coverage (the first year is included with your iPhone, even without AppleCare+). However, I contend that this is almost worthless — as iPhones very rarely need non-accident-related repairs in the second year. Further, if you’re the type of person that gets a new iPhone every year, the second year of standard coverage is entirely irrelevant.

AppleCare+ also extends the period for free telephone support. However, I again contend this is not of great consequence for most people, given the availability of free online and Genius Bar support.

Finally, there’s Apple’s new iPhone Upgrade Program. This is designed especially for people who want to get a new iPhone every year, trading in their old one. The cost of the program includes paying $129 for AppleCare+, spread over installments. Solely in terms of the standard warranty, the iPhone Upgrade Program is a terrible idea. As you’re getting a new iPhone every year, you never get the benefit of the extended second year of coverage. With this program, the only rationale for AppleCare+ is for its accident protection. Here’s where it gets interesting: Unique to this program, Apple doesn’t charge $129 for AppleCare+ each year — even though you’re getting a new iPhone annually. You only pay once every two years. In contrast, if you instead purchased a new iPhone with AppleCare+ every year from a carrier (such as AT&T or Verizon), you’d pay $129 each year.

Regardless, under the Upgrade Program, the calculations regarding accident damage remain exactly as described above. Over 4 years, you will have paid $64.50 x 4, or $258, for AppleCare+. If you only damage your iPhone once during this 4 year period (for a cost of another $99 to replace the phone), you still lose $57 by getting AppleCare+. If you get AppleCare+ from a carrier, and thus pay $129 each year, the disadvantage of AppleCare+ becomes much worse. So the best I can say here is that, if you plan to get a new iPhone every year and insist on getting AppleCare+, get it via Apple’s iPhone Upgrade Program.

Bottom line

The above calculations were based on my personal history. Given my track record, assuming that I would need to replace an accidentally damaged iPhone no more than once every 4 years was a reasonable one. And it meant that getting AppleCare+ was a poor financial decision.

Your mileage may vary. What if your personal history suggests that you are likely to need to replace a damaged iPhone about once a year? In this case, AppleCare+ will work out to your advantage. However, you might instead work on out how to take better care of your iPhone so it doesn’t get damaged as often.

At a minimum, all of this means you should not automatically assume that AppleCare+ is worthwhile. Before making a decision, consider your track record. Unless you are accident-prone, AppleCare+ is a bad deal. You’ll wind up paying more for the insurance than you would spend on non-insured repairs. And the more years you go without any accident, the more you save by skipping AppleCare+.

Of course, in the end, you’re taking a gamble no matter what you do. You place a bet based on what you expect to happen in the future. If you guess wrong, you lose. For some, the peace of mind obtained by getting AppleCare+ may be worth it, even if you are more likely to lose money by doing so. However, if you are willing to take a small risk, I contend that the long-run odds most often favor a win if you skip AppleCare+. It has certainly worked that way for me. Having to shell out $300 for a replacement phone last month did not change that.