Computer insurance: Should you buy it?

What is computer insurance and is spending the extra cash worth it? Here’s a handy guide to help put things in perspective.

Computer insurance is meant to protect your machine against malfunction, accidents, and (if you’re lucky), theft. Whether it’s in the form of a private insurance policy or a simple warranty, there are many choices to make when deciding whether or not you need to insure your laptop or desktop.

According to Consumer Reports, about one in three laptops and desktops break by their fourth year. Considering most manufacturer’s warranties last about a year, that leaves you with about three years of time when your computer could either sail ahead, problem-free, or be bogged down by hardware issues requiring maintenance.

But should you buy an extended warranty? To try and answer that question, we spoke with Adam Senderson, manager at Computer Overhauls in New York City, who thinks that generally speaking, buyers should purchase a warranty right from the start. However, if you’re buying a lower-end laptop, a warranty may not be worth it since you can just buy another $300 laptop a year or two from then. “If it’s a computer that costs over $750, you should definitely be getting the warranty,” Senderson said. “If it’s less, it’s more of a judgment call.”

Navigating the land of warranties can be difficult. To help you find your way and make the right choice, we’ve taken a look at manufacturer warranties, extended warranties, private insurance, homeowner’s insurance, and detailed what you need to look out for when choosing whether or not to buy insurance for your computer.

Manufacturer’s Warranty

Most products come with at least a one-year manufacturer’s warranty. If they don’t, you’re most likely getting a cheap laptop that will develop problems within the 90-day warranty offered at purchase. The manufacturer’s warranty typically covers most minor malfunctions, hardware support for any defects in the laptop’s material, tech support, mail-in repair service, and the option to return and replace a machine that you receive dead on arrival. Most basic warranty programs are good for replacing malfunctioning hardware, such as a hard drive or keyboard, but will not take responsibility for defects you caused or accidents that are unrelated to the manufacturer’s design and craftsmanship.

You don’t have to make a choice here; this kind of coverage should just come with the product.

Extended Warranty

According to Senderson, the most common repairs he sees are broken screens and liquid damage. In terms of software, “virus infection is quite substantial,” he said.

Generally speaking, Senderson said most PC laptop screen replacements and labor cost can run between $200 and $300, depending on the computer. Did you spill your coffee on your laptop during when you sat down at your desk? Senderson said liquid damage can be fixed for about $150 to $250 – that is, if the motherboard doesn’t need to be replaced.”

When buying a new computer, you’ll be offered the opportunity to buy an extended warranty. This happens 99.9 percent of the time, so be prepared. “You definitely want to find out what the warranty covers,” Senderson said. “Some cover wear and tear, and some cover accidental damage, which is a huge difference.” Before you go to the Apple Store, Best Buy, or Staples, do your research beforehand to see what these extended warranties cover and how much extra it’ll tack onto your bill.

Best Buy: Distributors such as Best Buy and Staples offer their own versions of extended warranties. Best Buy’s Geek Squad has two renewable options: tech support insurance lasting two years for $100; and Geek Squad Protection for two years for $180 (or $100 for one year). The latter includes tech support and accident coverage, as well as a one-time replacement for your battery and charger. Tech support covers virus removal, problems with your operating system, and labor that doesn’t involve physical parts. To gauge whether these insurance options are worth the money, consider this: a virus removal alone without the Geek Squad’s tech support insurance will cost $200.

Staples: Staples offers a renewable two-year Care Protection Plan based on your computer’s retail price. The basic plan, which lacks accident coverage, takes care of backup, virus removal, and hardware failure. The full plan includes the repair or replacement of your computer (whichever is cheaper) in case of physical damage, such as a cracked screen or faulty keys. Coverage ranges from $90 to $170, depending on the price of your computer. Considering virus removal at Staples without insurance, will cost you $160, it may be worth the investment.

By the way, none of these insurance options will help in case of loss or theft.

Apple: The AppleCare protection plan will extend a three-month warranty to three years. Since the least expensive laptop at Apple will cost you right around $1,000, the extra $250 is a small price to pay for hardware coverage and support.

Also of note, some major credit card companies will actually extend your device’s warranty up to an additional year for free if you charge the purchase with their card.

Renters or homeowners insurance

If your limit is high enough, you may be able to insure your computer equipment under your personal property coverage. This insurance may cover the policyholder’s equipment in case of certain damage or loss due to fire, flooding, and power surge. In this case, you should check whether your insurance will cover your computer even if it isn’t at home when it is damaged or lost, because the insurance policy may compensate you only if your computer is stolen from your home and not at a coffee shop or an airport, for example. You will often need to explicitly ask to adjust your policy so that it covers loss and damage outside of your home as well, as the policy will probably not offer this option automatically.

Standalone insurance

If you don’t have renters or homeowners insurance and aren’t interested in either, many insurance companies offer standalone insurance on specific valuables. For a yearly fee, plus a deductible, you can get insurance on your laptop to protect against theft, and any accidental damage like drops and spills. Many policies also cover flood, fire, or power surge damage.

Things to look out for

According to the Federal Trade Commission, consumers shopping for warranties should always get them in writing – talking to a representative over the phone is definitely not enough. The FTC also recommends considering the warranty’s length; make sure to understand what the warranty vows to cover, whether it commits to repairing your computer, replacing it, or giving you a refund, and what parts and repair problems the warranty applies toward. Also, be sure you know who to contact if service is needed, and whether it covers damages caused by the product itself to other products.

Needless to say, if you buy a warranty, always save your receipts in a place you’ll remember, because the company offering it to you may ask for it before service or reimbursement.

So, is insurance worth the money?

You may not like this answer, but it’s really your call on whether you buy the warranty or insurance. If you had to take out a loan to buy your new MacBook Pro, chances are you don’t have the money for repairs. In that case, the three-year Apple Care protection plan would probably be worth it. If you bought a $400 laptop during a Black Friday sale, it’s up to you, and depends on the cost. You may end up buying the warranty and never using it, but if you’re the type of person who’ll be afraid to bring your laptop out of the house in fear that it’ll get damaged or stolen, then for your peace of mind, insurance may be worth it.

However, since most computer problems are due to malware or hard drive problems, you can try your best to prepare your computer for the worst by installing antivirus software and backing up all your files to a cloud service. Either way, it’s a gamble.

Will you be splurging on computer insurance next time you make a big purchase, or will you risk it?

[Image courtesy of RAStudio/Shutterstock]