Which crash upsets everything? No, it's not stock market crash.

A computer, which conks out, brings the whole world crumbling down. To ensure PC protection, a way out is to insure it.

Of course, you can't do much about all the data lost; however, you can get enough money that can help you buy a new one.

What does a PC policy cover?

A computer insurance policy covers location perils, natural calamities, faults in manufacturing, assembly, damage due to moisture and humidity, negligence in operation or carelessness, riot, strike, malicious damage, theft, burglary and weather conditions.

Coming to specifics, the computer insurance policy covers the following:

• Computer's hardware (main body), CPU, monitor, printer
• Computer's external data media like CD, floppy and storage

These computer insurance policies may be separately offered, but they are generally packaged as electronic equipment insurance policies. It may be also available as an add-on cover on your household insurance.

What these policies don't cover

Computer insurance is not given, where the machine is damaged due to pollution perils, depreciation, things for which manufacturers or suppliers are responsible under guarantee/warranty, interruption due to electric failure, wear or tear, functional failure, cessation of work and willful acts (you damaging your own machine).

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If your computer is more than 10 years old, damage due to electrical and mechanical breakdown is a claim, which will be rejected by insurance companies.

The costs arising from false programming, punching, inadvertent cancellation of information and loss of information caused by magnetic fields are dismissed. The replacement of data and regeneration of data are also not admissible.

What's on offer

Public sector insurance companies cover voltage fluctuation. So, if you stay in cities, towns and villages where load shedding is a daily event, this policy is for you.

Bajaj Allianz Insurance, in case the computer can be repaired, meets the costs of repair and where the repairs are of no use, resorts to a liberal scheme. That is, a 10 per cent wearing down allowance is given every year, the maximum being 50 per cent, over the years.

The portables

Laptops are considered as portable equipment for all risk policies. The first 1 per cent of claim, with maximum being Rs 5,000 is borne by the customer. The electrical and mechanical breakdown claim is extended, if more premiums are paid.

Insurance covers offered by the makers

Private computer manufacturers also have insurance covers, but they charge you for it, as it does not come as part of the deal. There are delays, too. For example, if a 40GB hard disc drive is to be replaced, it may take 25 days. The public insurance companies sometimes collaborate with a private manufacturer.

National Insurance has a programme called "Peace of mind," under which Seagate's hard disc drives are covered. The risks covered include repair of parts and replacement of hardware and monitor.

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However, mouse, keyboard, and external peripherals are excluded. You can insure your software as well. Tally accounting package has a tie-up with ICICI Lombard, which stands guard against burglary and calamities. The cover is Rs 5 lakhs for 1 year.

Warranty vs insurance: The difference

A computer insurance policy is different from a warranty given by the manufacturing company.

Of course, there are warranties for 1, 2 or 3 years also. But the main difference between an insurance policy and a computer maker's document is that a warranty covers manufacturing defects only.

PC premiums

The premium for a computer insurance policy is 1 per cent of cost of equipment. That is, where the machine costs Rs 30,000, the premium amount charged will be Rs 300.

A company like Royal Sundaram Insurance has three types of policies, called Silver, Gold and Platinum where limits are Rs 20,000, Rs 25,000 and Rs 33,000 respectively and premiums charged per annum are Rs 364, Rs 545 and Rs 728 respectively.

A consumer has to pay "Excess," from her/his own pocket, for a computer insurance policy if the cost of computer exceeds the limits given above.

For example, if a computer costs up to Rs 1 lakh, an amount equal to 5 per cent of normal claim, minimum being Rs 1,000, has to be rendered.

A computer priced above Rs 1 lakh necessitates depositing a minimum sum of Rs 2,500 as premium, by the claimant.

But, for a Winchester drive head crash claim, a sum equal to 10 per cent, subject to a minimum of Rs 2,500 is to be paid. Where a computer costs upto Rs 1 lakh 25 per cent is to be given, minimum being Rs 10,000 if the machine is above Rs 1 lakh.

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The compensation under PC insurance is replacement of machine, of same kind and capacity. Reproduction of lost information is admissible.

The catch in the fine print

A household insurance policy, which also covers computers, is not very convenient. Because, you may be asked to compulsorily choose 5 out of 12 items on list, if the computer is to be insured.

For example, you may have to insure home entertainment system or baggage, though they may be of not interest to you. For this an electronic equipment insurance policy is better.

Tips to get a good deal

Remember, that an annual maintenance agreement is vital, for an insurance policy. If shown, the premium is slashed.

Where the annual maintenance agreement is not available, the premium is loaded by 100 per cent, but if sufficient in-house maintenance facilities are exhibited, the premium is loaded by 50 per cent, only.

Look out for a computer insurance, which covers defective design, which is not part of your manufacturer's warranty. This proves advantageous.

Where the PC's insurance covers fault in manufacturing and assembly, again not written in the warranty given to you by the vendor, grab it.

If you have taken a household or fire or machinery cover, a bounty in form of a 5 per cent discount on computer cover may accrue.

An authorised service dealer's list of repairs and costs must be submitted. Besides, a valuation certificate of computer cost is also necessary.

On the flip side, remember, a computer insurance policy does not include terrorism. You have to take an extra cover for protecting computer from terrorists.

Meenakshi Subramaniam is a former IRS officer