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Computer insurance: do you need it?

Don't pay over the odds to protect your computer

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You may not need insurance at all. See why here.

When you’re buying a new computer it is common practice to be offered insurance when you get to the till. You know what it's like - they go on about how wonderful the computer you're buying is and then, when you get to the till, scare you with stories about how it could go wrong. Don’t be fooled, on average electrical retailers are known to charge their customers three to four times more than necessary for insurance.
Do you need computer insurance?

Currently, 72,000 computers are stolen each year in the UK, and more than 108,000 are accidentally damaged. If your laptop gets pinched from your house, on the bus or train or any other time your home contents insurance might not cover it or you might not want to claim on it because it will make future insurance payments higher (see below).

Most house contents insurance policies cover some additional items like computers that have already been specified by you. Do be aware, though, that there is likely to be an upper value limit. This means that they won’t pay out more than an agreed amount. If that amount is £1500 and your computer is worth £2000 then you will only be able to claim £1500.

You must decide whether you think the cost of the premiums balances out the risk of your computer being stolen and the money you would be awarded.

If your computer is not that expensive then the premiums are probably a waste of money and it would work out better to just buy a new computer. If you have a particularly glamorous and expensive laptop then it may be worth forking out for your own peace of mind!

Why is it different to a warranty?

The statutory manufacturer's warranty covers the purchase for a year. It will normally be buried at the bottom of the box. Always read this before taking out computer insurance because it is highly likely the two will significantly overlap. However, the warranty will only protect you if there is a technical fault. You won't be covered if the computer is stolen. If your computer is stolen, insurance will allow you to carry on your life or your business as quickly as possible by replacing what has been lost.

Sale of Goods Act

The Sale of Good Act is a particularly useful Act that not enough people resort to. It protects the purchase of goods over their 'expected useful life'. That means it will not cover you forever, much as you would like it to, but it will cover you for a few years. So it's valuable protection for goods that have an expected 'useful life' that is longer than the standard 12-month warranty. It means that if the product, such as a desktop or laptop computer, has an expected useful life of four years, its owner can get it repaired or replaced if it dies within that period, regardless of any warranties, standard 12-month or extended.

All computers should have a useful life of at least four years, so it is a waste of money to buy an extended warranty for a desktop or laptop computer. Once again, this doesn't help you out if you lose the computer, so that could be where insurance comes in handy.

Which policies are best?

There are lots of polices around and prices depend on how much cover you want. Don’t be sucked in to paying for things you don’t need. If you never take your computer abroad then don’t pay the extra £30 for worldwide cover.

Insure and Go will insure a £500 laptop for one year for £50. This covers:

Accidental damage

Worldwide cover

No excess (you will get all the money for the value of your property with no deduction)

Claims will be responded to within 24 hours

Chips and software.

You can buy a policy online by clicking on the link labeled 'Get a quote for computer insurance', choosing whether you want to insure a laptop or desktop and the value and then clicking next. To take out the policy click on the green ‘Purchase’ button and fill out a short form giving your personal details and some information about the make and model of your computer.

JS Insurance will cover a £500 laptop for one year for £75.This includes:

Accidental damage

No excess

90 days of worldwide cover

You can buy online by clicking on ‘Get a quote’ and typing in the value of your computer. Then select ‘Purchase policy’ and fill out the short online form giving personal information and details of the make, model and value of your laptop.

Laptopguard.co.uk will cover a £500 laptop for £49 for one year (£79 for worldwide cover) This will include:

Theft and accidental damage up to £3000 (but if your laptop is more than 18 months old the value will be considered to be decreased)

No excess

In vehicle cover (if it gets stolen out of your car)

Replaces new for old if the computer is up to 18 months old.

Click on the blue 'Get a quote' button on the right hand side of the screen and type in the value of the computer you want to insure. Once you have checked that you are happy with the policy then press ' Buy instant cover'. You first need to fill in your email address, postcode and date of birth and then will be directed to a new screen where you fill in the rest of your information and some details about your computer.

Compucover charges £65 for year-long cover of a £500 laptop but the price significantly decreases if you take out a longer policy. Two years costs £85, three years costs £120 and four years cost £140 which works out as just £35 a year. The policy covers:

Theft, accidental damage, fire and flood

No excess

Worldwide cover

Home, work, school and while you’re on the move.

You can apply online by clicking on ‘Buy now’ and entering the value of the computer and choosing how long you want the policy for. Then select ‘Proceed to application form’ and complete a short form including your personal details and the make and model of your computer.

What will happen if I make a claim?

It is quite possible you may be penalised in a number of ways:

1. Many insurance companies' upper limits are not very high and would not cover the cost of a new computer. Unfortunately computers depreciate quickly and a computer that cost £2,000 when new, might not be worth more than £500 after only a year. Your contents policy would only pay the present value of the computer.

2. If you make a claim on your contents insurance, your total renewal premium will be significantly higher. This is because the premium is based on the entire contents of your house and not just the item you claimed for.

3. Many house contents policies will not provide cover if you remove the computer from your house or the office. If you use a laptop and travel to business meetings you are taking an unnecessary risk.

What will not be covered by the insurance?

As with all technical equipment, computer insurance does not provide cover for items such as:

Maintenance costs
Electrical or mechanical failure
Normal wear and tear
Fraud and dishonesty.

What's the alternative?

Make sure that if you lose your computer it's not the end of the world. Back up your work to prepare you for any eventuality. Do not keep all email addresses on your computer but make sure they are also stored on an external hard-drive or in an address book (if you're more traditional).

Keep your photos and favourite music backed up on external hard drives, discs and memory pens.

For a business backing up is essential and should be done constantly. For a personal computer you may only want to back up when you upload new, precious stuff.

Amazon has a great selection of external hard drives with varying capacities and a range of prices.

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