Insuring your PC

Nowadays people will insure just about anything, from their house or car to weddings and even parts of their body.

But despite their relatively high cost not many people consider getting their computer (and its contents) insured.

If a PC is damaged or stolen then you could be left without important files, and music and software you have bought and downloaded would be lost. In this feature we will give some useful tips on how to ensure a PC and its contents are covered, breaking down the jargon so you don’t have to spend money unnecessarily.

To begin, we need to explain what a warranty is. Many people believe that goods come with a one-year warranty as standard; this is a myth. One-year warranties, also referred to as manufacturer’s warranties or guarantees, are a sales gimmick. They offer buyers an easy way to deal with products that develop faults. The cost of that service is included in the price.

Manufacturers have a pretty good idea how much warranty repairs from all customers cost them each year on average, and this sum is added into its pricing structure. Warranties on expensive goods can be as long as five years. Some retailers offer ‘no-quibble’ refunds on damaged goods. Again, these are a means of filling the consumer with confidence. The only valid legal aspect of a warranty is that once it is offered, it must be honoured.

Then there is the extended warranty, which is generally another name for ‘insurance policy’. Extended warranties, especially in the case of PCs, cover any combination of returns, repairs, spare parts and servicing in exchange for a one-off fee or monthly subscription.

Paid-for warranties, like manufacturers’ warranties, have nothing to do with your statutory rights - that means the protection afforded by legislation such as the Sale of Goods Act and Distance Selling regulations. We’ll discuss consumer rights legislation in more detail shortly.

Profiting to excess
The problem for buyers of technology goods is whether an extended warranty is good value. On the whole, we think not and we’re in good company. As far back as 2002 the Office of Fair Trading released a report on extended warranties in which it warned consumers of their pitfalls. These included potentially unfair terms and conditions in the small print, lack of clear information at the point of sale and excessive profits made by extended warranty schemes.

The report led to an investigation by the Competition Commission, which made a series of recommendations to Parliament that resulted in new legislation: the Supply of Extended Warranties on Domestic Electrical Goods Order of 2005.

The order requires retailers to display the price of the extended warranty alongside the electrical goods in the store and in press adverts. A standard leaflet must also be given to customers setting out their statutory rights and making clear the availability of extended warranties from other sources such as the manufacturer or specialist PC insurance companies. All this information must be presented in plain English so as not to cause confusion with ‘legalese’, the unfathomable language so often found in small print.

The new legislation also provides a number of means to deal with pressure-selling techniques. Retailers that found they were making more profit out of extended warranties than selling goods inevitably trained store and call centre staff to push this form of insurance on all customers.