Stuff Breaks. So says SquareTrade, the folks who offer an extended warranty for your iPhone and iPad, among other devices. It's true, and perhaps even more so with the abundance of glass on the iPhone 4. I have always kept my iPhone in a case, because, frankly, I'm clumsy and prone to dropping it. However, the new iPhone 4 is so slim and elegant that you might want to keep it unveiled. Case or no case, you should check out the SquareTrade offer. For $99 you get two years of coverage (or you can be billed $5.99/month). That represents a 20% limited time offer. You can transfer or cancel at any time and get a prorated rebate.
SquareTrade has an interesting way to verify that your device is operational. You download their free app, Protect iPhone 4less, and run it on your iPhone or iPad. The app is smart enough to know what kind of device you are running it on. The app grabs the unique ID of the unit and transmits it to SquareTrade, so they can be sure you are registering a working unit and not a different device. Additionally, you will receive an email requesting proof of purchase. I was able to email them my electronic receipt from the Apple store. This saves a step if and when you have to place a warranty claim. Your paperwork will already be in order and there should not be any delays, especially when it matters the most.
There are alternatives, to be sure, but the comparison is not apples to apples, if you will forgive the pun. You have to pay attention to the deductibles and what is and is not covered by each plan.
Apple offers AppleCare for $69 which covers the iPhone for its first two years. You can buy AppleCare anytime within the first year, but it expires when the device is two years old. The Apple plan includes software support plus support for accessories, but do your earbuds need support? Does anyone even use the included earbuds? AppleCare does not cover Accidental Damage (my primary concern).
On the other hand, SquareTrade does not cover loss or theft. With SquareTrade, if your device breaks, you must have it repaired, either by them (5 day service guarantee with most repairs performed in one day) or have it repaired locally, such as at the Apple Store, and be reimbursed for the repair. If SquareTrade can't fix it, you get the money to buy a new device, like the iPhone 5 or 6 perhaps! The SquareTrade warranty has a $50 deductible but even that might not be applicable if the issue is due to mechanical or electrical failure. SquareTrade's Accidental Damage from Handling (ADH) coverage even includes accidental liquid spills. SquareTrade also covers battery problems. If your battery drops below 50% capacity, SquareTrade covers it. This is something Apple charges $99 for if you don't have AppleCare.
By comparison, AT&T's MobileProtect plan appears to protect AT&T's bottom line. You pay $12/month and the AT&T deductible is $99 to $199 depending on the model of iPhone. If you need the coverage towards the end of the two year warranty, you will have already paid close to $300, and still lose up to $200 on the deductible. In other words, you will have paid as much as an unsubsidized iPhone, and you may end up with a refurbished iPhone instead of a cash payment to buy whatever you want, like the newest iPhone.
To be fair, AT&T's plan does cover loss or theft. However, that might be covered by your homeowner's insurance (with its own deductible and you have to decide if filing a claim is worthwhile). I also use MobileMe, with FindMyiPhone capability so I'm less worried about loss or theft. Plus, I used Pocket Labeler to create a 'Reward if found' wallpaper image as my 'lockscreen', so good samaritans have a way to return my phone.
In short, there are several options to protect your iPhone. SquareTrade looks like a square deal, and I will post an update if I have to use the claim service. I hope I don't but at least I have peace of mind!