We calculated the expected value of AppleCare+ across every Apple product category, factored in credit card purchase protection you already have, and arrived at conclusions that surprised no one on staff.
AppleCare+ is an extended warranty and accidental damage plan sold by Apple, a company that designs products out of glass and aluminum and then offers to sell you insurance against the consequences of that decision. The Editorial Staff finds this business model internally consistent, if somewhat circular.
We set out to determine, with arithmetic, whether AppleCare+ represents a sound financial decision or an expensive expression of anxiety. We examined four product categories. We built a representative hypothetical device in each one, with round numbers, so the arithmetic could be followed without a calculator.
Apple charges a flat fee for the annual plan, or a monthly fee that, run out over twelve months, adds up to noticeably more than the annual price -- a meaningfully different number that Apple presents as though it were the same thing. Check Apple's current pricing for the exact figures; the gap between the two payment structures is the interesting part.
For a hypothetical iPhone, index everything below to the annual plan price as a single unit. Repair costs without coverage, expressed as a multiple of that unit:
With coverage, your cost per incident in this hypothetical:
AppleCare+ also covers two incidents of accidental damage per year. So the math: if you crack your screen once in two years, you pay two years of the plan plus one incident fee -- call it about 2.15 plan-years' worth. Without coverage, a single screen repair runs about two plan-years' worth. In this hypothetical, the plan costs you a bit more: roughly 7% more than simply paying for the repair yourself.
If you crack your screen AND break the back glass in the same year: one year of the plan plus two incident fees comes to roughly 1.3 plan-years' worth with coverage, versus paying for both repairs out of pocket, which comes to roughly 4.5 plan-years' worth without. Coverage saves you a substantial multiple of the plan's annual price in this scenario -- the one Apple is hoping you can vividly imagine while standing at the checkout counter.
The break-even point is approximately one major repair every 18 months. If you damage your phone less frequently than that -- and most people do -- AppleCare+ is a net loss. Apple does not publish claims rates, but industry data from warranty analytics firms suggests roughly 15-20% of smartphone owners file a damage claim within two years. This means 80-85% of AppleCare+ purchasers pay for two years of coverage and receive nothing except the absence of financial worry, which is a real product, but not a tangible one.
MacBook coverage runs a few hundred dollars for three years, with the exact figure depending on model -- check Apple's current pricing. For a hypothetical MacBook Pro, index the figures below to that three-year plan price.
Repair costs without coverage, in this hypothetical, as a multiple of the plan price:
With coverage:
The MacBook calculation is more favorable to AppleCare+ because laptop repair costs are genuinely alarming and the per-incident fees are relatively low. One liquid damage incident in three years makes AppleCare+ worthwhile in this hypothetical: the plan price plus the incident fee comes to roughly 1.75 times the plan price, against a possible triple the plan price without coverage. However, if you have never spilled liquid on a laptop in your adult life, three years of coverage at this hypothetical price works out to a modest annual sum for peace of mind about a scenario that may not describe you.
The iPad's repair economics are less dramatic. Screen replacement runs a few hundred dollars without coverage, and a modest incident fee with it, plus the plan cost. In a hypothetical where the incident fee runs somewhat more than half the plan price, one cracked screen in two years costs a little under twice the plan price with coverage, versus more than four times the plan price without it. This is the clearest case for AppleCare+ if you or your children handle the iPad with anything less than archival care.
For the iPad Pro, the plan costs somewhat more, but the repair cost without it is considerably higher -- one incident can pay for the plan twice over. Check Apple's current pricing for the exact figures.
Apple Watch screen replacement runs a few hundred dollars without coverage. With coverage, the incident fee is modest by comparison. Given that the Apple Watch is worn on a wrist -- a body part that contacts doorframes, countertops, and hard surfaces with notable regularity -- the incidence rate is higher than for devices that live in pockets or bags. The Editorial Staff considers this the most defensible AppleCare+ purchase.
Before purchasing AppleCare+, the Editorial Staff strongly recommends examining your credit card benefits, a document approximately no one has read.
A Citi card's 2-year warranty extension on top of Apple's 1-year warranty gives you 3 years of defect coverage -- free. This does not cover accidental damage, but it covers everything AppleCare+ covers that isn't your fault.
The mathematically optimal strategy, which we present without enthusiasm, is to decline AppleCare+ on everything, deposit the premiums into a savings account, and self-insure. Over a lifetime of Apple product ownership, you will come out ahead. This is how insurance works. It is also how anxiety works, in the opposite direction.
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— The BuyGetRewards Editorial Staff
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