SquareTrade has been bought by Allstate. Allstate is an insurance company that does auto, home, and life insurance. They now do item protection plans like SquareTrade used to do.
I first wrote about SquareTrade back in 2009. At the time, I was overjoyed at the concept of warranties from Square Trade. If you don’t remember, 2009 was the era of incredibly overpriced extended warranties from electronics stores. It turns out that companies like Circuit City were selling merchandise at a tiny profit, and making all of their money by having their salespeople push high cost extended warranties on anything. Even worse, when you tried to collect on that coverage, it turned out that your warranty wasn’t actually from the company you bought it from, but some business you never heard of, and that didn’t really care what you thought about them, their service, or their coverage.
Is SquareTrade a Scam?
First off, SquareTrade is a legitimate company. It is now part of Allstate and they seem to be doing away with the name in favor of Allstate Protection plans. They’ve been in business for a long time now and have plenty of satisfied customers. However, there are some complaints about SquareTrade. Many of them stem from not fully understanding exactly what you are paying for, and how the coverage works.
I just bought a new, Samsung Galaxy S4 cell phone. I thought it might be instructive to look at how SquareTrade works by considering my purchase and the coverage option.
One nice thing about SquareTrade is that it is easy to get a price upfront, before you have to commit to anything, or call, or give out a bunch of your personal information. In this case, there is a special plan just for Samsung Galaxy phones. (There are also specific plans for iPhones and other popular devices.) On the day I looked, 2-years of coverage is either $99 as a single payment, or $5.99 per month.
I can already tell you that the SquareTrade warranty is cheaper than what Sprint was offering. Coverage from them was $11 per month, or nearly double. If you do the math, by making the one-time Square Trade payment, you only pay $4.13 per month which is an even better deal on coverage.
SquareTrade Warranty Review
Now, let’s review SquareTrade warranty coverage itself.
The biggest thing to notice right away on this plan is the $99 deductible. That works just like your car insurance. If anything happens to this Galaxy S4, coverage does not kick in until you’ve paid $99 out of your own pocket. So, for example, if your phone need $135 worth of repairs, you owe $99 and Square Trade covers only $36. The in-house Sprint coverage has a deductible (up to $200) for most repairs as well, so that is comparable.
Another way to evaluate the cost of the SquareTrade protection plan is to see how much you have to pay before you come out ahead. In this case, if you paid the one-time fee, you need to pay $198 before you break-even.
The next step to review the SquareTrade warranty is to see what is covered. This is the one place where the company really does well. Everything from drops to spills to hardware failures are covered. The number one question on most people’s minds is what if I drop it in water, like a pool or toilet, and even that is covered. However, keep in mind that the $99 deductible still applies.
When Can I Buy SquareTrade Warranty
The number one problem with insurance, including property insurance, is what’s called adverse selection. That is, the people who are more likely to collect on the insurance benefits are the most likely to enroll in the insurance coverage. For health insurance, they deal with this by only allowing you to enroll at certain times, or under certain circumstances. For example, your health plan at work probably has an open enrollment period during which you can sign up for your insurance. That way, you can’t wait until you feel sick to enroll.
For property insurance, warranties generally have to be purchased right away to avoid a customer noticing a problem on their phone, for example, and then signing up. Although each warranty is different, in this case, the cellphone warranty must be purchased within 30-days of buying the phone. You’ll need a receipt to prove your purchase date.
Whenever you are buying anything like this, always perform this type of analysis.
- How much does it cost if I don’t use it? ($99)
- How much does it cost if I do use it? ($198 — cost + deductible)
- What is covered? (most things except theft)
- How long does coverage last? (2 years)
How To Use SquareTrade Protection
Finally, you want to know HOW to use your coverage. In this case, you’ll call SquareTrade and then ship them your phone. They’ll try to fix it and ship it back. If they can’t fix it, they’ll pay you for a new one, but only the amount you paid in the first place. In other words, if you get a smoking hot deal for your Galaxy S4, you’ll only get that much money out of your SquareTrade warranty.
Here is where a lot of people end up thinking SquareTrade is a scam when they try and file a claim. I paid just $100 for my phone after the buy one, get one deal from Sprint with my 2-year upgrade discount, and the rebate. If I buy a warranty from SquareTrade, I’m basically only getting $100 in coverage, and at $99 + deductible, that makes a SquareTrade warranty worthless in my situation.
Is SquareTrade Warranty Worth It?
This is where the Sprint warranty would actually win out. Unlike SquareTrade, Sprint, has a warehouse full of Galaxy S4 phones and they’ll actually just send me a new one if mine breaks. In other words, this covers the main problem with broken cell phones, you only get the discounted contract price once.
It doesn’t really help me to just cover my purchase price. I need coverage for the REPLACEMENT price. If it hasn’t been two years, I have to pay the inflated, $500-ish price to actually replace my phone. That’s a pretty big hunk of change, but there really isn’t a SquareTrade option that helps with that, unless I paid that full $500 price in the first place.
Is SquareTrade Right For Me?
Remember analyze your situation specifically and be sure to understand all of the details before you buy. For cell phones bought with a contract discount, SquareTrade is not a good deal for you.
For many people buying iPhones, AppleCare beats SquareTrade, or Allstate Protection Plans, or whatever they are calling themselves these days.
13 thoughts on “Is SquareTrade a Good Deal”
I purchased an LG OLED tv a little over 2 years ago at Costco with a 7 year warranty. I purchased from Costco because of their great customer support and got the long warranty to ensure I’m covered and now Square Trade is refusing to honor my warranty. I jumped through countless hoops, calling, sending in pictures, doing factory resets on the tv, etc. And they are saying it is screen burn-in. There is a line down the middle of the screen on certain colors only. I have the screen savers and pixel refresher set up, I never leave the tv on overnight, I don’t play video games and I watch nothing with static images. Squaretrade refuses to even discuss the issue and Costco says there is nothing they can do. I still have 5 years left on my warranty and a $2,000 tv with a line down the center. Can anyone offer any advice?
Unfortunately, I don’t know much about TVs and screen burn in, so I don’t know who would be right. I’d look through the terms to see if screen burn in really is an exclusion first. If it is, then I guess your only option is to find a way to prove that it isn’t. I didn’t think that LED TVs had burn in anymore, so maybe your TV is different. Unfortunately, the point of something like SquareTrade is to decouple it from Costco, so they are right about not being able to do anything. What I’m really wondering is if a new TV is out of its warranty after just two years? You might want to try going to LG and see if they would be more helpful.
Ugh, horrible, they will lie to you, waiting on parts, lie about the date they received the item, will not send a replacement phone or the funds equivalent to replacement of the phone. But they will send you back your warranty you paid. 24 days they have had my phone, not including weekends and no end of excuses. but the words we will not send you another phone or funds is not feasible. seriously. this is why you might get a copy of the warranty after you paid for it. FTC will be getting complaint from me.
I thought I had a 2 year warranty!!
Which I do BUT Its not Really good for 2 years, its really only good for the price of the item, which is only about
l’d like to add to my comment: that I think this info should be provided at the time you are purchasing the warranty
(That there is a limit to the coverage )! And Quite frankly No, I will not purchase another warranty grom Square trade!
Square Trade is such a rip off! We sent my iPhone 7 Plus and they sent it back the next day saying it was “fixed” no explanation. I turned on the phone and within a few minutes had the same issues. They told us to wait a week and do multiple factory reset. Every single time we call them to do another factory reset. This is the issue we have, the phone will work after doing factory reset after a few minutes the issues come back. We took it to apple and they said it’s the logic board. Square trade keeps trying to push it off until we reach the 30 days so they can excuse themselves out of it and we would another deductible. Stay away from this rip off company. They only steal your money!!
I had called on 10/10/2018 to speak to a rep about a claim I had made for a broken phone I had purchased on August 3, 2018 replacement. The rep (Simon) told me they would try to find a replacement phone and that my 3 year warranty would be completed once the phone was replaced. I told the rep that I had purchased the warranty for 3 years of coverage and just because I was using the warranty, I should not lose it. I told him it was not right to tell the customer they were purchasing a three year warranty when in actuality, I was repurchasing it every time I had a claim. He told me to hold and he was going to speak to his manager. When he returned he told me the manager was going to replace my phone and extend the warranty for the 3 years. I told him how thankful I was and the call ended. A short time later, I received an email from SquareTrade that said they were unable to find me a replacement phone (a phone that was brand new 1 month earlier) and they would be sending me a refund check for the cost of the phone. I was also informed that my warranty WOULD be completed at that time and I would have to spend the money to purchase a new warranty for my new phone. I told the new rep about my previous conversation with the other rep (Simon) and how he had gotten approval to extend my warranty to the new phone. she told me she could not do that and passed me to her manager. Her manager got on the phone and was very rude and gruff with me and told me (Simon) cannot extend a warranty to the new phone because they could not find a replacement. I felt this was a racket and a very convenient, sleazy way to make a buck! I bought a 3 year warranty that was guaranteed by another SquareTrade manager that was not honored. This company is a joke! Don’t waste your money!
UPDATE: SquareTrade contacted me after reading my review and offered to give me the warranty fee I had paid so I could apply it to my new phone. The representative was apologetic for the offer the previous rep had made to extend my warranty after my damaged phone claim was completed. She explained that it was not SquareTrade’s policy to extend warranties but they wanted to offer me the warranty fee to apply to my new phone. I explained to her that I was completely satisfied with the execution of the warranty and how they had handled it so quickly and fairly. My only complaint was what the rep (Simon) had told me and how the company would not honor it even though our conversation was in the notes. I am grateful SquareTrade contacted me and resolved the issue. They acted with integrity and I could not be happier. Thank you.
I didn’t know SquareTrade people read this financial website. Cool. I’m glad you got the help and service you needed.
SCAM SCAM SCAM SCAM!!!! Stay away from Square Trade. Take a look at reputable customer site TrustPilot.com at over 700 negative 1-star reviews from unhappy customers just like you. Stay away from this dishonest company.
According to SquareTrade rep, they actually cover the retail price, not the subsidized cost.
BUT their paperwork sure doesn’t say that. They need to clean up that mess!
Yes. That would be a VERY big difference in whether or not it is worth it. I’ll have to contact someone over there as well.