A service contract or an extended warranty is a gamble between a consumer and a manufacturer or a third-party service provider. In effect, you're betting that your computer needs expensive service during the life of the contract. If your computer continues to work perfectly, you lose the bet.
Most home and office computers are pretty reliable. If they do require expensive service or repairs, it's probably within the first year, while the original warranty is in force (most product defects show up within the first couple of months). Remember, a computer is not like an office copier or a home furnace that needs periodic maintenance in order to continue working properly. And if you are reading a book like this one, you can probably do many computer repairs yourself, without the need for an expensive service call. Therefore, conventional wisdom tells us that most computer service contracts are a bad investment.
However, there are some cases where a service contract makes a lot of sense. For many users, a service contract is an investment in peace of mind. If you plan to use the computer in an environment where it is subjected to hard use such as a shop floor or a classroom, you can expect it to need frequent service. But if your business or school has its own computer support people, you may not need an outside service contract.
A service contract on a laptop computer is often a good investment for several reasons. Laptops often have more problems than desktop systems because most users handle them more roughly-opening and closing the cover, bumping them around when the computer gets moved from one place to another, and so on. And it's a lot more difficult for a typical user to repair a laptop without special tools and an inventory of parts.
Look for the same range of terms and conditions on a service contract that you found on the initial warranty. A low-cost contract might only include mail-in repairs and a limited number of telephone calls to the support center, while a more expensive contract could include on-site service and unlimited telephone support.