Networking hed: Health insurance for your PC? dek: Buying computers is fraught with complexity. From warranties to service contracts, sweat the details. dek: The key to a service contract? Don't expect anything to come easily. dek: Make sure your service contract includes diagnostics service. by Joe Rudich

Here's one piece of good news for personal-computer purchasers large and small: There is no rustproofing option. Whether you're negotiating the lease of a fleet for corporate use, or simply trying to strike a deal for an economical package for personal Internet cruising, the process has become loaded with nearly all the complications that make buying an experience so many people dread. While it may not include a rustproofing dilemma, the process offers a complex series of choices regarding financing, option packages, and of course, extended service plans.

The way computer maintenance plans are presented varies greatly between the personal and corporate buyer, but the general idea is the same. A new computer is expected to function properly during its lifetime, and guaranteed to do so for some period--usually one year--after purchase. Like cars, some individual computers never seem to need repair, while others are constantly on the sick list. All PC owners decide, actively or passively, whether they want a maintenance contract or if they will pay for repairs as needed.

These basic maintenance choices are the same for personal and business computer ownership, but the service options and reasons for making this choice are significantly different, so let's consider them separately.

Personal care

As with cars or other appliances, some PCs never need any service. Most of us know people with such luck; most of us are reasonably assured we are personally not among this fortunate group. In the case of PCs not blessed with perfect health, the degree to which the buyer's and seller's preconceptions diverge may start at the end of that warranty period. While some systems integrators offer comprehensive warranty coverage, others exclude some of the components, and the length of PCs' standard warranty varies.

Ideally, an extended warranty or service contract will even out any missing coverage and stretch coverage out to a longer period. "A service arrangement can generally get your system repaired faster and at a cost you can budget for," said Compaq Services representative Shelby Penrod. "If you need your PC on a daily basis--for home-office work, college studies, or to write articles--and it goes down, can you afford to wait a week or more for a part? Probably not. Also, do you have the time and ability to haul it back to the store?"

Many personal PC buyers agree with those sentiments, and pay $200 to $300 for a service contract. For them, the chief motivator is that they have little or no knowledge of what repairs would cost, and no idea how to get them done. The second-most popular form of service plan for personal PC owners: a friend or relative with some degree of computer skills, who is asked to perform repairs and regular maintenance. Sometimes, of course, the PC handyperson might need thousands of dollars in parts to get a computer working again. Also, because there is no industry-recognized "Friends Who Know About Computers" certification, there is a risk that their efforts could cause additional damage. Finally, most computers are sealed with a sticker that cautions against opening the box, lest the owner void the warranty.

Mary Johnson, a national speaker and business owner, relied on a relative with nominal skills to maintain the first two laptop computers she purchased. Because her Realtor training business was dependent upon her own PCs, when she bought a new PC in 2000 she opted for the extended warranty offered by the PC manufacturer. "On the one hand, I was glad to have some kind of coverage, because this computer had problems just weeks after I bought it," she explained. "Unfortunately, I'm not so sure the extended service plan gave me anything that the standard warranty wouldn't have provided.

"My problems happened within the first year I owned it," she said. "And even with the warranty, I had to deal with their telephone support, which was very frustrating. Once they figured out the problem, they shipped a part to me and I had to install it myself. My problem got fixed, and it didn't cost me anything. But it wasn't as effortless as I expected."

Never expecting anything to be effortless is probably the key to satisfactory relations with a service contract. Other PC owners have found even greater surprises in contracts that were expected to end their worries about PC failure. Many consumer PC retailers' service centers follow very regular procedures, which commonly include formatting a system's hard drive and reloading system software--regardless of whether a user has backed up data. Ultimately, an extended warranty will get a functional PC back in the owner's hands, but not necessarily in the same condition.

Paul Ryburn is a small-systems consultant, trainer, and programmer in the Memphis, Tenn., area. He has been in the position of advising prospective computer buyers dozens of times, as both a professional consultant and as a friend, and his feelings are unequivocal. "Extended warranties are rip-offs," he contends. "They fall in the same category as paying extra for credit insurance on your Visa. There are several reasons why--the first being that most computer hardware comes with a warranty anyway."

According to Ryburn, there are a couple of fundamental problems with extended warranties. "Most new computer systems come with a one-year warranty. If the motherboard is bad, if the hard drive is faulty, if the RAM chips are no good, you're probably going to discover these problems well before the year is up, and you'll be able to get it serviced for free under the original factory warranty.

"The extended warranty doesn't kick in until after the original factory warranty ends. In other words, if you bought a one-year extended warranty, it covers repairs during the second year of the computer's life. Chances are, if the equipment is faulty, you'll find out before the extended warranty even begins."

This is conventional wisdom: Computer equipment is most likely to fail either during its initial period of use--due to inherent manufacturing defects, or after an extended warranty is over--when it has become decrepit from advanced age. Thus, the odds of having trouble-free functionality during a PCs salad days are in favor of computer owners.

"Extended warranties are a bet between you and the warranty company on whether your computer will need repair, with the odds heavily in favor of the warranty company," Ryburn says. "If the warranty companies lost money by selling these things, they'd probably stop selling them, just as casinos would close their doors if their patrons won more money than they bet. If you're worried that your computer will break down, take the money you would have spent on the warranty and put it in a savings account instead. That way, you'll have the money if your computer needs repair at a later date. If your computer never breaks down, you can buy a treat for yourself instead."

One way to evaluate an extended warranty is by simply learning what it does and does not cover and comparing that to what it should cover. Here are a few questions to consider:

What are the manufacturer's warranty terms?

Are peripherals purchased at the time of sale included in the contract?

What happens if you add or change the hardware during the warranty period?

When does the extended warranty take effect? With some stores, the service plan runs concurrently with the manufacturer's warranties. In other cases, it doesn't start until the PC maker's warranty ends.

Will service be provided in your home, or will it require that you bring the computer to a service center? Onsite service is rarely included as part of standard warranties, but may be available through an extended service plan.

Can the warranty be transferred to someone else if you give away or sell your PC before the contract expires?

Do you need your PC to be operational at all times, or can you get by if its repair takes days or even weeks?

Can you perform some degree of maintenance or repair yourself?

If you don't buy the service contract, how much out-of-pocket expense could you incur at any given time to pay for PC repairs?

Individual PC purchasers should also consider that they are not quite as limited as retail stores might lead them to believe. Extended service contracts do not need to be purchased at the same time as a PC, so you can go home and think about it, rather than make the decision immediately after selecting RAM and CPU. The only likely requirement is that an extended warranty should be activated before the expiration of a manufacturer's warranty.

Also, extended service plans can be obtained through third-party warranty vendors. WarrantyNow lets you buy an extended warranty for any PC; similarly, WarrantyNet will give you bids for extended service coverage from a number of warranty vendors. Finally, some premium credit cards, such as Visa Gold or American Express Optima, offer PC service contracts. Simply by paying for your PC with that card, you could gain an extra year of warranty protection.

Business service

The basic equation of service contracts is the same for corporate customers as it is for individuals: Is the certain cost of a contract preferable to the unpredictable cost of performing repair on an as-needed basis?

All the common-sense caveats (for instance, go over the contract with a fine-toothed comb) apply tenfold to corporate service. There are additional concerns for a multicomputer organization, including the following:

Many computer systems can be defined as mission-critical. Servers and other centralized systems tend to fit in this category. With these systems, service vendors should offer a high-speed service (two to four hours) for their repair. However, this level of service--and its accompanying higher charge--is probably not needed for all systems, so each should be categorized appropriately.

If an organization has computers in multiple locations, never assume that coverage will necessarily be available (or identical) in all offices.

A procedure for escalating service calls that are not resolved quickly should be defined. Often it will take several visits to completely repair a firewall, for example. These scenarios need to be included in the contract.

It may be possible to negotiate a service contract to include periodic maintenance or diagnostics service; diagnostics may be especially valuable when troubleshooting problems that are not verifiably caused by a hardware malfunction.

There also are certain advantages to negotiating service for a large number of computers. A bulk purchase may lower the unit cost to some degree, but be aware that most computer manufacturers and vendors have very slim margins on the sale of equipment and look to service for profitability. If nothing else, however, larger numbers can reveal the comparative costs of choosing a service contract. The average number and cost of PC malfunctions will reveal how much was saved (or spent additionally) to arrange service by contract.

Extenuating circumstances

There are undoubtedly some bad service contracts, but in most cases customers are dissatisfied because they expected even more service than was promised--a mistake they could avoid by being well-acquainted with a contractor. Even with the best extended warranty, some people, like Paul Ryburn, may consider it no more than a bet (and his advice to set aside the cost of an extended warranty for possible repairs might work well).

Paying for unexpected repair can be a real hardship, however, and the conditions of the service bet may be similar to those in an insurance policy. Because insurance premiums are paid to protect against significant disasters, it is never wise to hope for an equitable return for premiums paid from such a policy, because it pays only in the event of disaster. Like any form of insurance, it is a bet most people should hope to lose, and one businesses can't afford to ignore.

Joe Rudich is a network administrator with the St. Paul Companies in St. Paul, Minn.