Smartphones, Tablets and Laptops — How Do They Fit in Your Insurance Policy?

In today’s digital world, it’s quite common for the average homeowner to have multiple electronic devices such as smartphones, tablet computers, and notebook computers. These items can be very expensive to replace in the event they are lost, damaged, or stolen. Some coverage is available in the standard home insurance policy, but it may not be all that you need. On the other hand, sometimes the offers made by merchants and service providers for insurance on these devices aren’t necessarily the best offer. To be a savvy consumer, review your options and make a decision based on your own risk tolerance level.

The standard home insurance policy provides coverage for computers under the personal property coverage section. The devices are known as electronic data processing equipment and there is usually a specific sublimit that is lower than the total personal property limit. With new technologies continuing to evolve at a rapid pace, it’s not clear how the policy will respond to items such as tablet computers and smartphones. While they can be considered electronic data processing equipment, they also serve additional purposes. This is an area where the technology is evolving much faster than the insurance companies and policy forms can respond.

Even though there is some coverage under the home insurance policy for your devices, keep in mind that there are definite limitations on the coverage regardless of where you live- Alabama, Alaska, Arizona, Arkansas, Colorado, etc. For example, they are only covered to the extent it arises out of a covered peril. This means they are covered if they are stolen or if your house burns down with the devices inside. You are not covered if you simply lose the item or drop it and it breaks. These latter are more likely causes of loss, so you should consider that it’s probable your home insurance will not cover most instances of loss or damage. Another factor to consider is the deductible. While your electronic devices can be quite costly, they are still subject to your home insurance policy’s deductible. That deductible is generally thought of in the context of a large loss to your home, not an isolated loss of one article of personal property. Even if your device is covered, it may not exceed the amount of the deductible on your policy.

Other policies are available to insure your equipment in a more comprehensive fashion. However, there are two main factors to consider when evaluating whether or not to purchase such a policy. First, you need to understand exactly what types of loss the policy will cover. Will the policy cover any type of loss or is it very limited, in which case your home insurance policy is no worse. Second, how much is the insurance relative to the cost of your device and your ability to fund a loss? It generally does not make sense to purchase insurance for something that you can afford to replace with funds out of pocket.

Ultimately, how you insure (or don’t insure) your electronics is a decision best made with all the facts in front of you. Armed with the proper information and your own philosophy on risk-taking and insurance, you can properly evaluate your options.

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