Maryland Attorney General Douglas F. Gansler has secured promises from the country's four major wireless providers and an insurance carrier to fully disclose their cell-phone insurance policies upfront.
People often don't realize they have to pay a monthly premium -- typically $4 or $5 -- for the insurance and another fee to secure a new phone if they lose the original. And the new phone often isn't new -- it could be refurbished.
"My wife, my friends and everyone I've spoken with has dealt with this," Gansler said, adding that there is nothing illegal about selling cell phone insurance. He just wants to be sure consumers know what they're getting.
"If anybody knew upfront that they're spending $5 a month for the life of the phone, plus a $50 deductible and they get a used phone ... nobody would buy this service," the attorney general said.
He planned to announce the deal this morning in Rockville.
The four participating carriers are AT&T; Mobility, Sprint Nextel, T-Mobile USA and Verizon Wireless.
They have all agreed to inform insurance buyers -- at the point of sale -- of:
The monthly fee.
The deductible amount.
The replacement equipment condition.
Limits on claims.
The cancellation policy.
"We concur that these efforts will benefit our customers in Maryland," Verizon Wireless attorney Timothy Heaphy wrote in a letter to Gansler's office.
Insurance provider Asurion Protection Services will give each carrier an insurance disclosure document that prominently highlights the terms and has agreed to contribute $1.5 million over the next two years to four charities associated with the wireless providers.
"While Asurion believes that it has always provided appropriate consumer disclosure and has not violated any Maryland law, Asurion nevertheless agrees to take the steps," general counsel John W. Rakow wrote in a letter Wednesday to Gansler.
"Whenever you're buying any kind of insurance, it's really important for you to be told exactly how it's going to work, how much it's going to cost you, and what you're going to get if you have to make a claim," said Susan Grant, director of consumer protection at the Consumer Federation of America. "Without that information, you can't really judge whether or not it's worthwhile."