Martin Banks, Personal Computer World 07/82 - checked

July 1982

There is something very civilised about insurance, about the way that we seek to protect ourselves against the loss of a valuable item (or person) so that we can - within the bounds of reason and practicality - replace the loss with something that is just as good.

There is something about insurance that is a problem, however, and that is the way it has become such a complex subject to comprehend. For example, how many of you have ever actually read all the sections of an insurance policy, all the small print that sneaks around the bottom of page 94 of the great tome that makes up the policy? I suspect that the answer is very few.

This does mean, unfortunately, that we regularly place ourselves in the position of having to take a great deal of what is written in such documents on trust. It also means that, however fair and scrupulous the insurance industry is, we are liable to oversell or under-price ourselves on a policy on something we value. We are often going to make fundamental mistakes on policy selection. We are even going to get completely the wrong idea about what a policy will actually provide, and be shocked beyond both comprehension and bank balance as a result.

Despite its civility, therefore, insurance can be a tricky little minefield to negotiate for the unwary, and that is exactly what seems to be starting to happen in the personal computer business.

Many users - the majority if they are sensible - are taking out insurance policies on their brand new machinery when they purchase it from the dealer's shiny showroom. They are not, however, always actually buying what they thought they might be. What they thought they might be purchasing was some form of insured maintenance deal.

It is only later that they find they weren't. What they were buying was an ordinary insurance policy - and that is something completely different.

There are now several companies offering insurance policies that have been developed especially to cover domestically located high technology products; this includes hi-fi and video equipment as well as personal computers. Among them are Commercial Union, Entertainment and Leisure, and British Engine Insurance.

The policies they offer are broadly similar, though obviously a special deal can always be arrived at. Most provide for theft, damage in transit, and the accidental catastrophic failure of the equipment. Under these circumstances the insurance company promises to pay the value of the policy or the replacement value of the equipment as new, subject to all the usual terms and conditions of the policy.

The list of items and events that the policies do not cover is, as might be expected, normally extremely long. The Entertainment and Leisure policy, for example, has a list of 17 exclusions, ranging from faulty manipulation, erasure and loss of magnetism of tapes, cassettes or memory banks on to inherent vice (which we can't write about in a family magazine like PCW), and ending up with theft from vehicles with removable or soft tops.

All well and good. These are the things one normally tends to find in insurance policies. Sometimes there can be more abstruse items that should be checked, like for example the exclusion of consequential loss over and above the loss of the insured property. This means that, though you have a replace-as-new clause in your policy, you won't be covered for having to hire a system while waiting for the new one to arrive.

Despite things like that, the policies are useful items to have as the final financial fall-back position, and they are good value for money for what they offer. The Entertainment and Leisure policy, for example, costs £114 a year to cover a system valued at £2500. That covers a system anywhere in the UK, including transit and theft from a vehicle. If the system is insured in a specified building only, it costs £70 to insure.

That is considerably cheaper than the equivalent maintenance contract. Most companies in the maintenance business will look towards charging around 20 per cent of the system's value, per year, to run a maintenance contract on a machine. This can seem a lot to many new users just on the point of signing the cheque for their computer. At its silliest, it represents £13.99 a year to get a maintenance contract on a Sinclair ZX81. The notional £2500 system will cost around £500 a year on that basis.

So what do you get for this amount of money? Well at one extreme it must be said that all you will be paying for is the privilege of having the engineer come out within 24 hours to confirm your diagnosis that, yes, the machine has broken. At that level it is something of a waste of time and money. The more comprehensive contracts will provide such things as a guaranteed call-out time, which can be extremely important for users that base revenue-earning activities on the operation of a computing system; preventive maintenance, which means that the engineer comes round maybe twice a year just to give the machine the once-over and a clean (dirt and dust being a popular source of failure modes); and, finally, skilled engineers. These should be people who know and understand the quirks of a particular system, who can diagnose many faults just from experience but have the ability to find the failures that are rare, if not unique.

Having such people available for the user is bound to cost someone - in this case the maintenance company - a great deal of money in salaries and equipment. That is why maintenance contracts are expensive. They are even more expensive, pro rata, for personal computer systems, for the systems themselves are now so cheap. Well, that is only partly true. The computers are inexpensive, but some of the peripheral equipment that goes to make a system isn't. The peripheral equipment often contains a fair element of mechanical gubbins as well, and it is usually those bits that crap-out and require the expensive maintenance. Years ,ago, the now departed Isherwoods was offering a £20-plus-parts fix on Commodore PETs. For the box alone that fee is probably still economic, but it certainly wouldn't be for disk drives or printers.

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