Feature: Insuring Your Notebook

True story: A guy walks into a hotel conference room to give an important PowerPoint presentation. He sets up his notebook computer on the table, plugs it into the wall, connects it to a projector, and turns around to pour himself a cup of coffee. A hotel server enters the room with a water pitcher, doesn't see the power cord stretched from the table to the wall, and trips over it, sending the notebook crashing to the floor and rendering it inoperable. The guy improvises his presentation and wins the account--but loses the computer.

I've served up this woeful tale as a precautionary reminder: Notebooks are fragile creatures, highly susceptible to breakage and theft. In 2001, accidents (such as dropping the computer) accounted for 60 percent of the notebook insurance claims processed by Safeware, a computer insurance agency. Theft was number two on Safeware's list, at 26 percent, followed by water or flood damage at 7 percent and power surges at 3 percent.

If your employer owns your portable computer, chances are it's insured and you have no worries. If it's your computer, here's what you need to do to protect it.

Check Your Warranty

Notebook warranties vary greatly, but they typically cover parts and labor costs for 90 days or longer. Generally speaking, these warranties protect you against defective hardware--your notebook's hard drive dies unexpectedly, for instance. Theft, breakage, fire, and other mishaps are rarely covered under a warranty, if ever.

Many vendors offer extended warranties that add further protection--at further cost. For example, Dell Computer customers can choose from one- to four-year warranties, with options for mail-back or at-home service. The warranties cover hardware failure that may occur during, but not necessarily because of, typical usage.

Dell's Complete Care adds protection against power surges, water spills, and breakage. Theft and fire aren't covered, however. As with most extended warranties, you must buy Dell's warranty or Complete Care options within 30 days of your computer purchase.

The costs of Dell's Complete Care warranty can significantly add to your notebook's bottom line, however. A basic one-year, mail-in warranty on an Inspiron 4150 notebook costs $140, compared to $219 for Complete Care. Also, Complete Care isn't available in California, Florida, or New York. These states have laws preventing companies not licensed to sell insurance from offering warranties that are, in essence, insurance policies, a Dell representative told me.

In addition to vendors, some electronics retailers such as Circuit City and Best Buy offer extended warranties that also serve as a kind of insurance. Often, these warranties extend the manufacturer's coverage period from, say, one year to three. Also, some retailer extended warranties offer full replacements to broken equipment (such as a notebook), while the original manufacturer's warranty may not. While such warranties can add $150 or more to your computer's cost, one disaster two years after its purchase may make the expense worth it.

Check Your Homeowner Policy

If you have insured the contents of your home or apartment, chances are the computer you own is covered, at least to some degree. For instance, my Allstate condominium policy provides up to $5000 of insurance for electronic data processing equipment. The policy covers my equipment anywhere in the world, according to my agent, as long as my condo is my primary residence. In other words, if my Inspiron is stolen at an airport security checkpoint, I'm covered.

Allstate will reimburse me for the current replacement value of a computer with specifications similar to my Inspiron 8100. That's preferable to policies that offer the actual cash value. With such a policy you're reimbursed for the depreciated cost of your computer only, as opposed to the cost of replacing it. Replacement-cost policies are a bit more expensive than actual-cash-value policies, but in most cases they're worth the difference. None of these policies, of course, covers the value of lost data or the costs of replacing or retrieving lost data. In addition, they generally cover hardware only and not software costs.

But insurance policies can be limited. For instance, my Allstate policy has a $250 deductible and insures against loss from theft, fire, or vandalism, but not breakage. Policies can vary significantly, so check with your agent.

Third-Party Insurance

If your notebook is inadequately insured and your agency doesn't offer additional protections (such as an add-on "floater" or "rider"), don't worry. You can always purchase insurance from a computer insurance agency like Safeware.

Safeware's stand-alone notebook insurance policies cover "theft, fire, power surges, lightning, spilled coffee in the keyboard, accidentally dropped notebooks, and natural disasters like earthquakes, hurricanes, and floods," according to the company's Web site. The site lets you easily get a quote, and you can request the amount of coverage you need to protect your full investment.

I haven't purchased insurance from Safeware, so I can't personally vouch for the company. However, Safeware's insurance policies are underwritten by American Bankers Insurance of Florida, which has an A (excellent) rating, according to an A.M. Best spokesperson. The A.M. Best ratings are a benchmark of an insurer's financial strength; the top rating is A++ (superior). I'd like to hear from readers who've insured their notebooks with Safeware and can report on any experiences filing a claim with the company. Please contact me at james_martin@pcworld.com.

So let's recap. The basic manufacturer's warranty usually offers the least amount of protection, but you can supplement that with extended warranties. An extended warranty may protect your notebook for longer periods of time against breakage--but not against fire and theft. Your homeowner or renter policy may protect your notebook against fire and theft--but not breakage. For full protection, consider buying insurance from a provider such as Safeware--particularly if you frequently take your notebook on the road.

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