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Specialty device insurance may be the way to protect your gadgets

All of those expensive electronic gizmos and gadgets that piled up under the Christmas tree are worth a pile of cash. The sales clerk probably offered extended warranty plans for the new toys. If you declined the warranties, you did the right thing, experts say.

“Consumers can purchase those types of insurance coverage at a much lower rate if they do so on their own, not through the store,” says Robert Hunter, director of insurance at the Consumer Federation of America. “Chances are you can buy a plan with better coverage, too, at a lower cost.”

If you didn’t accept the store clerk’s sales pitch to plunk down money for a gadget’s insurance plan, it’s not too late to protect your new flat-screen TV, iPad, XBox or other tech toy.

Your insurance options

You have a few options to protect your electronic investment.

“If electronic devices are stolen (from your home or car) or damaged due to vandalism, they would be covered under your home or renter's insurance policy,” says Bill Mills, vice president of SIA Group, an insurance agency in North Carolina.

insurance gadget

However, even though your homeowner's policy covers theft of tech gadgets, it typically will provide only enough cash to account for the current value.

“If the TV is a year old or even 3 years old, its value will be depreciated. So you won’t receive the amount to replace the item. You’ll receive what the 3-year-old item would be worth at the time of the loss,” Mills says.

Warranties purchased at stores like Best Buy are another possibility, although consumer advocates like Hunter don't recommend them. These plans typically cover “lemons” (if the item requires repair more than three times), damage caused by power surges and “normal wear and tear." But these extended warranty plans do not typically cover items if your dog gnaws on them, they’re dropped in a puddle or they're sent through the washing machine’s spin cycle.

There’s also coverage offered through specialty carriers like Safeware in Columbus, Ohio, and Worth Ave Group in Stillwater, Okla. They provide insurance throughout the country in the event you accidentally dunk your iPod in water or run over your smartphone with your car.

Opting for specialized gadget coverage versus an in-store warranty won’t save you a ton of cash; depending on things like deductibles and coverage, it costs anywhere from a little less to about the same. However, a specialty policy provides more coverage.

“Every kind of risk is covered -- including drops, spills, flood, surge protection, and even worldwide coverage if a loss happens on vacation," says Aaron Cooper, marketing director at Worth Ave Group.

In addition to covering just about any mishap, specialty device insurance usually covers the total replacement cost of the item at current prices, rather than on a pro-rated or depreciated basis. And unlike manufacturer’s warranties -- which don’t cover theft, accidental damage, third-party repairs, peripherals (speakers, printers) or loss of software -- a specialty device policy can be transferred to a replacement item, Cooper says.

insurance gadgets

Cooper says most device policies purchased through a specialty carrier vary based on:

The term of the policy. Typically, it's one, two or three years.

Your state. All insurance premiums are based on your state’s insurance regulations.

The item’s value. To save a little money, you can select the amount of coverage you want to buy rather than choosing full coverage.

The deductible. Typically you can choose no deductible, a $50 deductible or a $100 deductible. Mills says the higher the deductible, the lower the premium.

Here’s a look at how much it might cost to insure some of the most popular electronic devices with a specialty insurance company, according to Cooper:

iPad: Coverage is available for all sizes. Premiums begin at $37 for $499 worth of coverage and a $50 deductible.

iPod: Coverage is available for all generations. Premiums begin at $29 for $199 worth of coverage and a $50 deductible.

iPhone or another smartphone: Premiums begin at $55 for $300 worth of coverage and a $50 deductible.

Non-“smart” mobile phone: Coverage is available for nearly every type of non-smart mobile phone. Premiums begin at $45 for $399 worth of coverage and a $50 deductible.

Flip cam: Premium, coverage and deductibles range depending on value of camera and deductible preference.

Digital camera: The premium, coverage and deductibles depend on the value of the camera and your deductible preference. Most premiums start at roughly $35.

insurance gadget

Flat-screen TV: Coverage is available for TVs of most sizes, but premiums depend on the value of the TV. Premiums begin at $29 for coverage of $300 or more, with a $100 deductible.

Laptop or netbook: Premiums begin at $25 for $300 worth of coverage and a $50 deductible.

Desktop computer: Premiums begin at $25 for $300 worth of coverage and a $50 deductible.

Xbox/Wii/Playstation gaming systems: The premium, coverage and deductible depend on the type of system, its value and your deductible preference.

E-reader (such as Kindle or Nook): Premiums begin at $30 for $300 worth of coverage and a $50 deductible.

Coverage also may be available for PDAs, calculators and an assortment of other electronic devices. Specialty device coverage is generally not offered for Blu-ray players and Surround Sound systems. “Those items may be covered under a homeowner's or renter's policy if they are stolen,” Mills says.

It’s handy to hang on to the device’s receipt to show ownership and proof of purchase in the event you need to submit a claim. “If the item was a gift or you don’t have the receipt, you may be able to send the damaged item when you file a claim to prove ownership,” Cooper says.

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