Do US carriers have a problem with phone insurance?

It seems that the US phone insurance market is changing fast. For years, insurance used to be easy money for big carriers, but that's now becoming a loyalty issue.

The high-margin cash flow

For many years, phone insurance has been a high-margin add-on for big US carriers. AT&T, Verizon, and T-Mobile built their model around one key moment: when a customer buys a new, expensive phone.

At that point, people naturally worry about breaking or losing it, so they often accept insurance without questioning the price. For example, it's no fun getting a $1,300 Galaxy S25 Ultra on Monday and dropping it on the concrete on a Tuesday.



Hence, carriers reinforced this by limiting insurance sign-ups to a short window, for example: around 30 days after purchase.

A new, detailed report cites analyst data, based on nearly 40,000 consumer surveys, which shows how this approach is starting to fail. Phones now last longer, often close to four years, and prices have settled above $1,000. As a result, insurance is no longer just extra revenue. It is becoming a signal of whether a customer will stay or leave.

Behind the scenes, the insurance system still depends on large companies that remain financially stable. The weak point is distribution, which is mostly controlled by carriers. Most carriers still treat insurance as a separate add-on instead of part of the overall service, and that creates problems.

Strict enrollment deadlines mean many users only think about insurance months later, after a scare or close call. At the same time, monthly prices of $14 to $19 look expensive as new, cheaper options appear. New technology also allows insurers to check a phone's condition remotely, making old carrier rules feel unnecessary.

The way ahead

The market has split into two clear paths. Big carriers focus on convenience and bundles, while MVNOs and third parties use insurance mainly to keep customers from leaving.

MVNOs like Spectrum Mobile and US Mobile offer protection plans for around $5 per month. They make little or no profit on insurance, but it helps lock customers in.

Third-party providers like AKKO take a different route. They allow people to sign up for insurance at any time and often cover many personal devices under one plan. This breaks the link between buying a phone and buying insurance, reducing the control carriers once had.

Income also plays a major role. Lower-income users are more likely to buy insurance because replacing a $1,300 phone is no fun and it's often impossible if severe damage occurs. Higher-income users are more likely to skip carrier plans and pay out of pocket if something goes wrong.

Easy profit?

For big carriers, phone insurance is no longer free money. When prices stay high, budget-minded users start looking at MVNOs instead. From here on out, insurance matters less as a cash grab and more as a way to keep customers from walking.