HVAC Service Contracts..Are They a Smart Investment?
Service agreements can be called many things, such as a service policy, maintenance agreement, or HVAC contract, but all serve a common purpose: to protect the homeowner against costly repair bills to their heating or cooling system. Essentially, they are like taking an insurance policy out on your HVAC equipment. The hope is that you won’t need it and that your furnace, boiler, etc will get through the year no problem. However, they have the potential to save you a ton of money in the event something goes wrong. Since these agreements can take many forms and offer varying degrees of coverage, I thought we could take some time and dissect a few of the key components typically found throughout the industry.
1. A good service agreement should offer you some form of preventative maintenance i.e. a tune-up, inspection, or cleaning. This will help to ensure your equipment continues running efficiently and safely. Research shows that a quality cleaning could save you 10% on fuel usage. Doing this every year allows the company to get to know your system and how it operates. Technicians will be able to diagnose any current issues and address them immediately. They can also make you aware of any potential future issues preventing them from becoming major issues down the line. All in all, this service provides immediate value to any kind of service agreement.
2. Overtime labor is another issue that service agreements often cover. Some policies will limit you to a certain number of service calls per year, while others give you unlimited overtime calls under a certain set of circumstances. The important thing here is to understand what kind of coverage you have. Are you covered if your heat goes out over the weekend? Keep in mind overtime labor can be costly!
3. Parts coverage is the third ingredient to any service contract. More specifically, what parts (if any) are covered and how much? Discount policies are common, offering the homeowner a % off all parts replacements. These particular contracts offer you limited protection but save you more on the upfront annual cost. On the other end of the spectrum are the “bumper-to-bumper” policies. These traditionally cover all the parts of your equipment, but can be VERY costly-especially if you have a repair free year. Then, there are the more middle-of-the-road style agreements that cover only specific parts but provide 100% coverage on these parts. That means, if your burner breaks-they not only get you a new one for free, they install it for free as well. You just take your chances that the part you need will be covered.
As always, it is best to evaluate the value offered in the cost of the annual agreement. Determine what your needs will be this year and then find the agreement that best meets those needs for the best price. Keep in mind that not all agreements are the same and some come with specific requirements and regulations. Some companies will offer discounted policies, new customer rates, and payment plans so take some time when deciding. Whether your heating/cooling system is old or new-it can’t hurt to have insurance against major breakdowns and repairs.