Frequently, we learn lessons from other industries that apply well to home heating and AC. The other day, I had to visit my independent auto mechanic shop. While in his waiting area, I overhead him tell another customer that he “never recommends his customers to buy third-party extended warranties on their car or truck”. He went on to say that that third party warranty companies were diligent at selling warranties /repair insurance and collecting premiums, and not-so-good at being around later or paying out for claims. In case the term is new to you, ‘third party” simply means a company not involved otherwise in the transaction.
While monitoring HVAC industry forums and news, what I have read seems to generally support my mechanic’s overall assessment on extended warranties offered by third parties.
First, let’s be clear on the difference in the types of warranties that you can buy for your home heater or air conditioner system. The following parties typically offer warranties on heating and A/C equipment, either when it is first installed or sometimes later. :
- Manufacturer of the equipment
- Local dealer or independent contractor who installed the equipment
- A third party insurance or warranty company, who is not the manufacturer or installing contractor.
Extended warranties will usually provide different terms for (or ways to dictate coverage of) the following:
- Main Components (compressors, condensers, heat exchangers, etc)
- Parts (other than the above)
- Labor to diagnose and fix any warranty claims (this can be a higher amount than parts)
- An amount of time the warranty covers
- Deductible (amount that must be paid by you later before warranty starts paying)
- “Ordinary wear & tear”, abuse or neglect vs. a failure or repair covered by the warranty
- Which repair company is required to do the work for you to be eligible for payment
- Does the warranty pay for the repair directly, or do you have to pay for it and apply for reimbursement
- Higher efficiency or more sophisticated heating, cooling, heat pump or indoor air quality equipment increases your likelihood of needing /using an extended warranty.
- A yearly maintenance plan is something most owners should have but do not
- If you only have budget for one of the two, go for a yearly maintenance plan over an extended warranty
- Always be clear on what the manufacturer’s warranty covers and exactly what any extended warranty actually gains you above what you already have from the manufacturer or installer
- If you have the discipline, you could take the money you were going to pay an extended warranty, deductibles, and excluded items and instead, put it in a savings account. You can use those funds to pay for your own maintenance and repairs later.
- Regular maintenance will help prevent the need for repairs from neglect
- If you decide to go with an extended warranty, those from a large manufacturer are usually a better bet than the other two categories. Sometimes dealers are owned by the manufacturer. It helps you to know if they are or are not.
If you have experience related to this, whether you agree with the comments above or can offer something to the contrary, please post your comments.