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]

Apple's stores are leading the retail industry in revenue per square foot, and none of its competitors seem to be able to crack the code.

Apple’s retail stores are practically holy sites to company’s legions of dedicated fans,  but as it turns out, they’re also the envy of the retail world. According to the latest figures from RetailSails, Apple’s stores lead the retail industry in terms of the money they generate per square foot. And for the first time, Apple is in the top 10 for highest overall sales per store.

Just how is Apple able to perform so much better than other consumer electronics retailers and world-renowned brands? And more important, why haven’t any of them been able to duplicate Apple’s magic formula yet?

Diamonds are for suckers

According to RetailSails (PDF), Apple Stores generate more revenue per square foot than stores operated by high-end jewelry retailer Tiffany & Company. That would be impressive in its own right – Tiffany & Co. is the leading retail diamond merchant and came in number two in RetailSails’ metrics. But Apple didn’t just beat Tiffany, it trounced the poor jeweler: RetailSails estimates Apple stores pulled in $6,050 per square foot, compared to $3,017 per square foot for Tiffany & Co. Other retailers didn’t even come close. Number three was lululemon athletica, whose stores generated an estimated $1,936 per square foot. Coach and Michael Kors rounded out the top five with $1,871 and $1,431 per square foot, respectively.

“Apple obviously stands out from the crowd, with sales per square foot double that of the number-two chain and more than six times the figure for Best Buy,” said RetailSails founder Josh Ramer, via email. “By combining premium products and revolutionary retail stores, Apple has not only built the most valuable brand in the world, but also an environment that drives shoppers into its stores – 94 million store visitors in just the latest quarter alone, or 19,000 per store per week.”

Adding insult to injury, Apple’s figures are increasing: In 2011, RetailSails estimated Apple’s store revenue at $5,647 per square foot – up seven percent in the last year. And this in a year that marked considerable tumult for Apple’s retail efforts, with the hiring and firing of John Browett as the head of retail operations.

As a rough gauge of success, sales of about $300 per square foot are considered about average for general retailers in the United States by organizations like the International Council of Shopping Centers – jewelers and specialty apparel retailers generally have higher averages. By that measure, one could argue Apple stores are doing twenty times better than the typical shopping mall retailer.

Apple’s retail success doesn’t end there. For the first time, Apple stores have cracked the top ten for highest sales per store, coming in at number nine with an estimated $51,148,000 earned per location in 2012. That’s still far behind the leader, membership warehouse chain Costco, which RetailSails estimates will pull in $137,170,000 per warehouse in 2012. But Apple is the only consumer electronics retailer in the top ten: The rest are warehouse stores (Sam’s Club, Walmart, Pricemart, BJ’s Wholesale), high-end retailers (Neiman Marcus, Nordstrom) or grocery retailers (Fairway Market, Village Super Market).

It should be noted that RetailSails’ numbers are estimates. Retailers aren’t in the habit of publishing their per-store sales figures, so RetailSails often has to comb through details in earnings calls and investor presentations, press releases, regulatory filings, and even rely on sales information published by competitors – then they try to strip out online and direct-to-consumer sales, franchise revenue, licensing, and other revenue streams to come up with per-store numbers. The company’s 2012 metrics cover more than 200 chains in 15 different product segments. Although its charts are disproportionate (the Electronics Stores bar should be more than twice as long as Luxury, Jewelry, & Accessories Stores, for instance), it provides an idea how other segments are faring:

Apple’s strong points

Why are Apple Stores so successful, particularly when compared to other folks trying to sell consumer electronics?

“In 2001, when Steve Jobs and Ron Johnson first decided to open a store to sell Apple products, they didn’t start with a vision to sell stuff,” said Carmine Gallo, keynote speaker and author of The Apple Experience in a telephone interview. “They decided the vision behind the Apple Store would be to enrich lives.”

That approach is borne through in the steps of service Apple outlines for its store employees:

• Approach customers with a personalized, warm welcome
• Probe politely to understand all the customer’s needs
• Present a solution for the customer to take home today
• Listen for and resolve any issues or concerns
• End with a fond farewell and an invitation to return

It’s easy to notice the clever little acronym, but it’s more important to see what word isn’t mentioned: sell. Apple emphasizes the experience of visiting an Apple store, using Apple products, and letting users see how those products fit into their lives rather than focusing on making as many sales as possible. To that end, Apple store employees are hired more for their personalities than their sales or technical backgrounds, and – unlike many other retailers – they’re not paid on commission. If a staff member at a typical retailer spends an hour with a customer but doesn’t make a sale, that employee will probably get reprimanded. At an Apple store, all that matters is that the customer had a good experience.

It also means Apple store employees focus on products that meet a customers’ needs, rather than pushing items that will ring up the largest sale. Customers ogling a $2,000 iMac might find themselves steered towards a less-expensive model if it’s a better fit; similarly, customers looking at an iPhone or iPad are likely to find Apple employees showing them how the devices can meet their needs rather than scripted selling points. And beyond an initial hello, Apple employees are also willing to let customers try stuff out on their own and make the first move.

Copying Apple isn’t easy

All these things help explain why customers like Apple stores – others include the Genius Bar, Apple’s One-on-One training sessions, and scan-and-go purchasing with the Apple Store App. But do they explain why Apple stores are so profitable per square foot? Given that Apple stores have been around since 2001, why haven’t other retailers been able to copy the experience and try to beat Apple at its own game?

There are a few other factors to consider:

Few products

A typical Apple store carries hundreds of individual products, from iPhones, iPads, and Macs to headphones, software, and accessories. But the selection is very small compared to consumer electronics retailers, let alone mass-market retailers, whose stores often feature thousands or tens of thousands of individual items. Apple’s tightly-focused product line also enables it to focus its retail experience in ways more generalized retailers can’t match.

No wasted space

If you have a one square-foot store and a million-dollar product, you only need sell one item a year to utterly dominate the RetailSails survey. Apple’s retail stores aren’t exactly diminutive: Two of Apple’s London stores are in the 25,000 square-foot range, and Apple’s recently-opened store in Grand Central Station is about 23,000 square feet – all large by modern retail standards. However, many of Apple’s retail stores are comparatively modest in size, occupying more-or-less ordinary (if high-rent) spots in shopping centers. As of August 2012, Apple had 394 retail locations worldwide; according to Apple, 240 of those are in the United States. Compare that to struggling big-box consumer electronics retailer Best Buy, which has more than 1,100 stores in the United States (omitting several hundred Best Buy Mobile outlets). Comparing the scale of Apple’s retail efforts to Best Buy really is a case of apples and oranges, but some of Apple’s astonishing revenue-per-square-foot is due to Apple operating comparatively few square feet.

Less baggage

When Apple opened its first retail stores in 2001, its main product was the Macintosh — even the iPod just barely existed. The Mac had never dominated the PC industry, and Apple’s presence in big-box retailers like CompUSA and Circuit City were generally failed to show Macs in a good light, or even show them working at all. Part of Apple’s intention with opening its own retail stores was to control the presentation of its products and give a positive experience to customers. It had the advantage of starting from scratch; even if customers were familiar with the Macintosh or other Apple products, none of them had previous experience with an Apple retail store. That’s not true of any retailer hoping to copy elements of Apple’s retail formula: Even if they successfully change their existing retail experiences to be something more akin to Apple, it will take some time before customers forgive or forget the echoes of their previous efforts.

The X factor

If there’s one company that has directly tried to challenge Apple’s retail strategy, it’s Microsoft, which has opened its own stores in Apple’s image. And in some cases, in the literal shadow of Apple stores.

Since I happen to live in the vicinity of one of these rare Microsoft stores, I recently wandered in to get some first-hand experience and see how they stack up beside Apple’s own.

Microsoft’s store location is only a few yards from an Apple store, and conspicuously larger, but otherwise the resemblance is startling, down to blue-shirted employees. But it felt vacant, with idle employees and a handful of kids playing with an Xbox Kinect setup. An employee greeted me after I entered, and I said I was curious about the typing experience on the Microsoft Surface. Big smile; the employee enthusiastically led me to one and then proceeded to use it for me, pointing out key elements of Windows RT without letting me touch the device, ask questions, or politely get a word in edgewise. It was a few minutes before we got through the apparently scripted introduction, and I was able to ask if I could test out both the Touch Cover and the Type Cover. The answer was yes, but it was still more than a minute before I actually got to touch a Surface unit. I was able to give the Surface a decent test drive, and I did encounter the slow typing problem in Microsoft Office so many others have written about (but Brent Ozar has a fun video). The Microsoft store employee was witty and answered my questions accurately, but only seemed prepared to ask me if I was already using a tablet.

After I’d finished, I walked down the the Apple Store braced for the worst, because I’ve always found this particular location be overcrowded and noisy. It was. Nonetheless, I was “greeted” immediately, although it was more of a “Hi!,” a nod, and an overwhelmed laugh as the store employee helped a child pick up a dropped toy. Once that was accomplished, I said I was curious about the typing experience on the new iPad mini. “Here, try it!” the greeter said … and just like that handed me an iPad mini. I was less than three feet inside the store, and I’d been there less than 10 seconds. A couple minutes later (child and parent successfully reunited), the employee swung back around, asked what sort of writing I did, if I’d found Pages (Apple’s word processor app for iOS), or if there were particular apps I wanted to try out. I was still barely inside the store.

It turned out my big calloused fingertips didn’t like the iPad mini typing experience any more than being able to out-type the Microsoft Surface. But I know which store made me jump through hoops, and which immediately put the product I’d come to see in my hands.

“What’s easy is mirroring the look of an Apple Store,” said Gallo. “What’s harder is to hire, train, and motivate employees for a transformational customer experience. I hope other retailers improve based on what they’re learning from Apple, but it’s really hard to get the people part right.”