One great thing about writing the Gripe Line blog is that the readers here are a smart bunch. In response to my post "When to insure your tech gear," I received great advice on whether to buy my son a new laptop and phone, how to teach him to be more responsible with gear, and when and why to buy insurance for my tech purchases. I'll save the parenting advice for another outlet, but when it comes to insurance, read on.
"You suggest purchasing insurance rather than a warranty for tech items," Gripe Line reader David says, "but does the insurance offer replacement value or depreciated value? A three-year warranty will give you repair or replacement of the original. But insurance policies tend to pay depreciated value. If it's depreciated value, you're not going to get much for your son's phone or laptop in the third year."
Good question, David. I ran it by Aaron Cooper, marketing director at the Worth Ave Group. While this may not be true for every insurance policy, for the Worth Ave Group, the answer is, essentially, replacement cost.
"We replace or repair all items on a Replacement Cost Scale," Cooper explains. "That scale is based on the current market value of an item."
While it's true that I wouldn't get back the price I paid for my son's laptop (as I did with my SquareTrade warranty, which expired with that replacement), insurance is still not a bad safety net for the klutzy tech-gear owner who is more likely than the rest of us to destroy his gear or let it get stolen. The policy is slightly cheaper than a warranty and continues for the life of the policy -- not the item. You can also insure gear that isn't brand new.
Cooper asked his claims department to provide a chart of how the company depreciates computers and other electronics. Here are the relevant findings:
- 1 year: 15 percent
- 2 years: 25 to 30 percent
- 3-plus years: 50 percent
- 10 percent per year
- Maximum depreciation: 50 percent