Why insure a used smartphone?

Why insure a used smartphone?

Russian mobile operator MTS has started selling insurance for used smartphones. The insurance option previously had only been available for new devices. The insurance is available in all of the operator’s shops across the country.

Customers may choose between three insurance products. The least expensive one, priced at RUB 355.00 (US $5.32), extends the phone warranty by one year and includes protection from power tension fluctuations during the term of the producer’s warranty. The second option, from RUB 1,529.00 (US $22.90), includes protection from theft, natural disasters, fire, and accidents on water supply systems. The insurance is valid across the country for a year. The highest-end version, priced from RUB 3,050.00 (US $45.69), also covers mechanical damage to the body of the smartphone.

Tarifica’s Take

The decision by a major operator to extend its device insurance to used devices indicates that the Russian device market is not particularly vigorous. If users value their older smartphones to the point where they intend to keep them long enough to want to insure them against damage rather than replacing them, that means that they either find that these devices fully meet their present and foreseeable needs or simply cannot afford a new and presumably higher-end device.

If there truly is a market for insurance on used smartphones, indicative of a significant desire on the part of consumers to retain these devices and extend their use into the medium or long term, it could be because those consumers do not see operators’ networks advancing in a way that would require a newer and better device to optimize their potential. It could also indicate a feeling that, aside from 5G, current smartphones are already sophisticated enough and there is no need to invest in a new device at frequent intervals.

Either way, while the insurance products may make MTS some money (and it appears that only the highest-priced version offers protection against what most users encounter the most, i.e., damage to the body of the device), in a growth environment, operators would gain the most from offering better network features and encouraging users to upgrade devices so as to be able to access those features and consume more data.