The myth that AppleCare+ is worth it

[Note: See also my latest (April 2016) take on this subject: Why AppleCare+ is still not worth it.]

Back in 2006, I advised against getting AppleCare for your Mac, arguing that the odds that it would save you money were too low to make it worth buying. In 2011, I reached the same negative conclusion regarding AppleCare+ for iOS devices.

While I thought I had built a pretty air-tight case, there are apparently still people who remain unconvinced. The myth persists that AppleCare is worth getting. As one recent example, a Cult of Mac column, discussing AppleCare for the iPhone 6 and 6 Plus, stated: “AppleCare+ should be strongly considered for those devices.”

Had something changed since 2011? I decided to take a closer look. I found that nothing had changed. Except for a few rare circumstances, AppleCare+ remains as bad a deal as it ever was.

To see why, let’s look at exactly what AppleCare+ covers. AppleCare+ for an iPhone 6 offers two years of coverage for $99. For the moment, let’s ignore accident protection and just examine the basic coverage.

Basic coverage

The most critical point to grasp is that AppleCare’s coverage is very limited. You don’t even have a chance of saving money with AppleCare except during a relatively narrow window.

Basic AppleCare only covers things that are not your fault, such as failures due to manufacturing defects. One year of this same basic coverage is included free with each iPhone.

This means, for covered service issues, purchasing AppleCare+ is a complete waste of money for the first year.

Further, most things that go wrong with an electronic device due to manufacturing defects and such tend to happen within the first year. This means that the second year of coverage is not likely to be of much value either. And if you happen to be someone who gets a new iPhone every year, selling or trading in the old one, the second year of coverage is entirely irrelevant.

By the third year, you have to pay for any repairs, whether or not you purchased AppleCare+. Once again, having AppleCare+ becomes worthless at this point.

In other words, the only time that AppleCare+ can be of any help here (and it’s a low chance) is during the 12 month interval between one and two years after you purchase the iPhone.

Even if something does go wrong during this second year, it still may work out to your disadvantage to have paid for AppleCare+. For example, if your iPhone 6 battery dies, you can get a new one for free with AppleCare+. Without AppleCare+, it will cost you $79. This means that, should this turn out to be the only time you need AppleCare+, you will have paid $20 more for the replacement battery by getting AppleCare+ than if you had foregone the coverage.

From a probability perspective, I can’t see any way to argue that AppleCare+ is likely to pay off for basic coverage.

Accident protection

AppleCare+ offers one additional benefit: you get two years protection against “accidental damage.” This is protection that the one year free warranty does to cover at all. As such, people who favor AppleCare+ typically cite this as the key reason to buy it.

However, if you take a closer look, you’ll find that even the accidental damage protection is not likely to work to your advantage.

First, bear in mind that “accidental damage” does not cover a lost or stolen iPhone. You are still on your own if either of these things happen.

Second, each accident incident (and you are limited to a maximum of two) will cost you an additional $79. So, for example, if you need to replace a shattered screen it will cost you $79 if you have AppleCare+. Without AppleCare+, replacing the screen of an iPhone 6 will cost you $109 (for the 6 Plus, it’s $129). In other words, getting AppleCare+ for an iPhone 6 would only save you $30 here (and that’s not counting the $99 you paid to get AppleCare+ in the first place). To me, that’s not enough incentive to make it worth shelling out $99 for AppleCare+ — money that you will never recoup if nothing goes wrong with your iPhone.

However, if you don’t have AppleCare+ and you need to entirely replace your iPhone 6, it will cost you $299 ($329 for an iPhone 6 Plus). At last, here is a case where it seems you can save significant money if you purchased AppleCare+. It is this scenario that leads to online postings such as:

“I dropped my iPhone the other day and it completely broke. I needed to get the phone replaced. Because I had AppleCare+ coverage, it only cost me $79. I would have had to pay $329 otherwise. I’m so glad I had AppleCare. Definitely worth it. Highly recommend everyone getting it.”

First off, the person glosses over the fact that they also had to pay $99 to get AppleCare+. But let’s ignore this for now. The larger problem with such postings is that they are anecdotal. As I pointed out previously, anecdotal evidence by itself is essentially worthless. That’s because, for every anecdote supporting one point of view, someone can come up with a counter-anecdote that supports the other position.

For example, take my own situation. I have owned 8 iPhones. I started with the original iPhone in 2007 and have gotten a new one every year since (the older one transfers to my wife). I never purchased AppleCare for any of them. Only one of the phones ever needed an out-of-warranty repair — and that occurred after the device was more than two years old. Had I purchased AppleCare at the current $99 price for all of these phones, I would now be almost $800 in the hole. Clearly not worth it.

Actually, if the person quoted above had considered all of their iPhone purchases (as I did), they too might have come to my conclusion. For example, if this was their fourth iPhone and the first time they needed a replacement or any other repair, they would have spent $479 to save $329. Looking only at your most recent purchase (or any single purchase among many that you have made) gives a potentially false picture.

But let’s not place any more value on my negative experience than on someone else’s positive one. As isolated anecdotes, they are both useless as a means of helping you decide whether or not you should buy AppleCare.

What would help is some sort of experiment — such as picking 1000 iPhone owners at random and following them for four years — and seeing whether or not AppleCare+ would have saved or cost money in each case. In the absence of such data, what other options do you have for making an intelligent decision? Here’s what I would recommend:

• Assess the likelihood that you will damage your iPhone

Some people are more clumsy or careless or rough with their phones than are others. Are you the sort that frequently drops your iPhone? Or has that never happened? If you’ve owned smartphones for several years, consider your track record. Have you needed to replace a damaged phone once a year or so? Or have you never needed a replacement? If you find yourself on the “bad” end of this spectrum, perhaps you should get AppleCare+.

• Assess your finances

If you needed to pay $329 to replace your iPhone 6 Plus tomorrow, could you afford to do so? Or would you possibly have to forgo having a phone at all? If it’s the latter, perhaps it’s worth the peace of mind to get AppleCare+.

However, bear in mind that, by getting AppleCare+, it will still cost you $178 ($99 + $79) to replace a broken iPhone. In the long run, I would argue that you’re more likely better off putting the $99 in a bank account each time you buy a new iPhone, saving the money to cover the cost of a possible replacement phone down the road.

So where does all this leave you?

Getting AppleCare+ for any reason other than accident protection is definitely not worth it. As for accident protection, if neither of the above two assessments tilt clearly towards getting AppleCare+ (and I suspect that it won’t tilt that way for most iPhone users), then I would still strongly advise against getting AppleCare+. Remember: this is a probability assessment, not a guarantee. AppleCare+ could still save you money in some unlucky circumstances — but the odds are against it.

Bottom line? For the vast majority of iPhone owners, AppleCare+ remains “a sucker’s bet.”

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5 Responses to The myth that AppleCare+ is worth it

  1. Chip says:

    I have to disagree. Based on my experience and those of friends

    (1) I have a 20-month-old iPhone 5 whose serial numbers on Apple’s site indicate they may be susceptible to both battery and sleep-button issues. I brought in my iPhone and because there are two potential problem issues – and because I have Applecare+ – Apple swapped out my iPhone for a new-looking refurb unit.

    (2) A friend of mine got a new iPhone last year and I asked if he’d gotten Applecare+ and he said no and asked why. I told him, and he went to the local Apple Store the next day and bought it. A week later he dropped his phone in the toilet. For only $50 more he was given a new replacement under Applecare+

    (3) In 2007 I bought the 1st generation of 24″ aluminum iMacs. They had logic board and monitor problems, and I got both swapped out just a month shy of Applecare’s expiration date. Without Applecare I would have been screwed and given the repair cost probably would have had to spend even more on a new or refurb replacement.

    And for average users, don’t count out the free phone tech support for three years for computers, especially for those who don’t live near an Apple Store. Pretty far from a sucker’s bet. (I’m sure you didn’t mean to come across supercilious and smug but when you use terms like those, and indicate you see no valid reasons for Apple’s extended warranties, that’s how it comes across.)

  2. Ted says:

    It’s really hard to know how to respond to your comments because your examples have been cherry-picked to show those cases when something went wrong and AppleCare paid off.

    For example, you said: “…he went to the local Apple Store the next day and bought AppleCare. A week later he dropped his phone in the toilet.”

    OK. But how many other friends and relatives do you have that own iPhones? How many of them bought AppleCare and never needed it? Conversely, how many of them didn’t buy AppleCare and were glad in the end that they did not? Or am I to assume that they all drop their iPhones in a toilet (or some equivalent disaster) eventually?

    And, when adding things up, don’t just count everyone’s most recent iPhone purchases; include prior purchases as well.

    My guess is that, at the least, the big picture will be far more murky than you described with your examples. At the most, it will support my contention that AppleCare is a bad deal.

  3. Chip says:

    My real-world examples are somehow “cherry picked” while your blinkered opinion is somehow clear-eyed logic. Got it Ted.

  4. Ted says:

    No one (least of all me) disputes that there can be good examples of when buying AppleCare works out well. My point is that, by themselves, these are not evidence that buying AppleCare is a wise decision in general. If all it took was a few good outcomes to prove a case, then we could point to lottery winners as proof that buying lottery tickets is a wise investment overall. It doesn’t work that way.

    Your initial comments amounted to giving three examples of when buying AppleCare+ worked out well. For my iPhone purchases, as I described in the article, buying AppleCare+ would have been a terrible decision, based on how things worked out. Does my experience trump your examples? No. Again, it simply means that we can’t use dueling anecdotes to settle the matter.

    My reply further suggested that you probably don’t need to look far to find counter examples to what you wrote. If you thought about all the people you know who have iPhones, I was betting that you could come up with instances where buying AppleCare did not (or would not) work out well. Perhaps more than three instances. If so, ignoring these counter examples amounted to cherry-picking. I stand by that assertion.

    It is because of the weakness of anecdotal evidence that, in my article, I instead attempted to build a case that rested on assessing probabilities based on the specifics of Apple’s warranty coverage and repair costs. And I based my opinion on the resulting conclusions. You may choose to disagree with my opinion, of course. But if you want to demonstrate the flaws in the reasoning behind it, it requires something more than a trio of anecdotes.

    [By the way, if the iPhone 5 battery issue you mention in your first example refers to the issue described in, and if the sleep-button issue is the one described in, then Apple will replace the battery and repair the sleep button for free even if you do not have AppleCare.]

  5. Maria says:

    I believe the AppleCare is worth it for a large computer system. My last four (I think) desktop systems have had major problems, each of which required repairs that would have cost me well over $500. One of the computers had several issues that in total would have cost over $1000. In each case, AppleCare completely covered these issues. Because I tend to keep my computers for at least 3 years these days, I would not spend $3000 on a computer without spending the additional money to get the extended warranty.

    That being said, I would not buy AppleCare for small items such as an iPhone or an iPad. I only keep my phones for two years and I am very careful with them. I have not had any issues with the phones that weren’t covered under warranty or resolved with a quick trip to the Genius Bar.

    So yes, I agree that AppleCare is not worth it for an iPhone or iPad, or possibly something like an Apple TV. But I would not dream of buying an Apple computer system without buying AppleCare to go with it. In every instance that I spent the money on AppleCare, it has paid for itself.

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