RockyMountain -- sounds like a great business opportunity for you!! If they can really make that much money taking on so little risk, perhaps you can go to Sprint and bid on providing this service for the current $7/month price tag and they would probably jump at the chance.
Do the same number crunching with your auto insurance, homeowners insurance, etc and you get the same results. Sure they make lots of money, but they also have lots of costs and risks they have to carry. Just think how much money Assurion **LOST** on replacing Sprint Pres -- it had to be a complete loss for them in terms of money coming in vs. Pres going out.
Insurance boils down to one simple question: Do you feel lucky? If you do, skip insurance and that is an extra $100 a year in your pocket, if you like to be risk adverse pay it and never look back.
Other insurance rates aren't even close to that. My truck was $52k and my insurance is $48.00 a month. (That's the closest to the phone and is way off) I pay 1/1083rd of the purchase price each month.
My Homeowners insurance with flood rider runs $63.00 a month, and insures a $260k house with $250k in replacement value for the property inside. Doing the math, I pay 1/8095th of the purchase price every month for the house.
Personal Liability Insurance is a rider on my house and runs $6.00 a year. It covers money-seeking individuals who claim they tripped on my property and require thousands of dollars in medical care, or if something happens to my kids friends as they are doing God-knows-what.
Way too high of a number to even play with when you look at what could happen...It would also replace your phone if my kid threw it in the pool. For $6.00 a YEAR!
$8.00 a month for a $500.00 phone? That is 1/62 of the cost of the phone...Every month.
I wouldn't have insurance other than liability if my rates were similar to that of the phone.
As I said in an earlier post; if I could find an investment group that could float me the money, I WOULD insure your phone if I could get 200,000 others to jump on in there. It sounds like you believe the insurance companies when they talk about how little money they make. If the insurance company believes it might come close to breaking even instead of making money or THINKS it might lose money, they can dissolve the policy, file some paperwork and quit paying out. They also get to keep the money they collected. It's like filing bankruptcy for an insurance company. The Pre didn't come close to hurting Asurion...They insure way more phones than just the Pre. HTC, Sanyo, Motorola, Kyocera, etc. Samrtphones, dumbphones, media phones are all the same price now. There are still more dumbphones out there than smartphones...the insurance companies are trying to make all the money they can as smartphones become mainstream...I bet they figured at 8 bucks a phone, they could insure nothing BUT smartphones and are making all the bank they can while the transition is underway. Look at how many claims have been filed here versus the number of people with no problems...I'd say the numbers are skewed higher here as this is a techie/geeky group here.
The other part nobody talks about here is the Insurable Risk Scale that ALL insurance companies use. Claim a phone every year, and watch your auto, renters, homeowners insurance go up at renewal. They will deem you higher risk if they check the claims filed. They WILL check that datapool if you file a car accident claim. If they see you claiming phones all the time, you will be assigned a higher risk score, and pay higher rates. Insurance companies don't give you anything for free. The people filing claims for smartphones all the time just jacked YOUR rate up 13%. You don't see it though, and that's sad.