Does Your Computer Need Extra Insurance?
Learn what your computer warranty really covers.
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Jeff Green has held a variety of sales and management roles at life insurance companies, Wall street firms, and distribution organizations over his 40-year career. He was previously Finra 7,24,66 registered and held life insurance licenses in multiple states. He is a graduate of Stony Brook University.
Computers are part of our daily lives, and most of us depend on at least one home computer. When a computer hasn’t been out of the box for long and something causes it to crash completely, what recourse do you have? What happens when you check the fine print on your computer warranty and find that the loss of data is not covered?
Unlike manufacturer's warranties, computer insurance provides coverage for loss or damage of data, in addition to theft, loss, vandalism, and accidental damage.
Computers and laptops are often among our most expensive personal possessions. In addition to the initial purchase cost of a computer, you typically spend a significant amount on purchasing software, peripherals, and downloads.
Additionally, the data you store on your computer can be invaluable, and the cost associated with loss of data can be difficult to estimate.
Accidental damage can leave a computer unfit for use. A coffee spill or water leak in your home can cause significant damage to your machine.
Fire, lightning, and severe weather can also put your home computers, laptops, and stored data in jeopardy. A short circuit or high-voltage current can result in a fire or irrecoverable damage.
Finally, one of the greatest concerns for computer and laptop owners is the risk of theft.
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What Does My Manufacturer's Warranty Cover?
Most laptop or computer warranties provide spare parts or cover the labor costs for repairs. However, these warranties only come into play if the laptop has hardware issues due to manufacturing defects.
Therefore, your computer’s warranty will cover problems with the internal components of a computer, but not your keyboard, monitor, peripherals, or software.
Warranties do not apply to hardware damage or defects arising from rough use. Some warranties become null and void if the user opens the computer and breaks a seal. The standard period for a warranty is usually one year.
Warranties do not apply to loss of data, malfunctioning of the system arising from its use, and other risks like theft or accidental damage.
These warranties do not cover software issues either, regardless of whether they came with the system or you installed them later. Manufacturers may provide the following types of warranties:
International coverage: Providing a limited coverage, this warranty can be useful for people who often travel.
Extended coverage: This warranty extends the manufacturer's warranty coverage for your computer or laptop. The duration of this warranty is between one and three years. Some versions also cover power surges, breakages, and liquid spills.
When you buy a computer, it can be worthwhile to check the manufacturer's warranty to determine:
- How to return a damaged laptop
- The availability of telephone or email support
- The process of completing repairs
- Whether repair parts will be new, used, or refurbished
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Does My Homeowners Policy Cover My Computer?
A homeowners policy typically will provide some coverage for your computer or laptop. The amount of compensation you receive after a loss will depend on whether you have specifically listed your computer on your policy, the amount of personal property insurance you buy, your deductibles, and other factors.
Another thing to consider is whether you carry actual cash value coverage or replacement value coverage. Actual cash value coverage will compensate you for the depreciated value of the computer, not the cost of a replacement.
Your homeowners policy may cover loss or damage to your computer if it is caused by a covered risk, such as lightning or a resulting power surge.
However, the policy will most likely have some coverage limits applicable to expensive electronics like computers. It is important to note that your homeowners policy will not cover any computer malfunctioning.
If one of your dependents is away at college and has a home computer on campus, your homeowners policy will typically cover that computer. Most policies offer the same limits that apply in your home, but they do limit the coverage to a percentage of the total loss.
Buying your student laptop coverage might be a good option depending upon the value of the computer and other factors which your independent agent can go over with you.
How Can Having Computer or Laptop Insurance Benefit Me?
While homeowners or renters insurance may cover damage to your computer up to a limit, having computer insurance has its own benefits. Most policies provide laptop theft insurance or computer theft insurance. However, with computers becoming increasingly mobile and portable, laptop insurance is a good idea today.
Although most computer insurance policies provide coverage for a variety of risks, data insurance is not one of them. Determining the value of data is not easy and data recovery is not always possible.
Some insurers do offer coverage for loss of data, but make sure you know under what circumstances, and how data is covered before you purchase a policy.
Other risks that even specialized computer insurance policies do not cover include:
- Corrosion or rust
- Damage arising from environmental causes such as dust, heat, or humidity
- Illegal acts
- War
- Pest and rodent damage
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Finding the Right Computer Insurance for Your Needs
One option you need to consider is whether you want basic coverage or extended coverage. Ask yourself these questions to get a better idea of what you need:
- How do you use your computer or laptop — for personal use or for business purposes?
- How much did you pay for your computer?
- How often do you use it?
- How often do you travel with your laptop or computer?
If you travel frequently with your computer or laptop and it is an expensive model, buying extended coverage can be beneficial. Your agent can give you a computer insurance quote that takes into account:
- The cost of insuring your laptop if it gets lost
- The likelihood of damage due to an insured risk
Thus, if you experience a loss, the insurer will either pay an amount equal to the value of the computer, or compensate you for the market value if the damage cannot be repaired.
Whether you are buying homeowners insurance for the first time, or you are interested in upgrading to a policy that covers more of your personal property, an independent agent can help.
Insurance Expert Jeff Green