Should I Sign a Service Agreement?
If you’re a homeowner, at some point you may be asked if you would be interested in a service contract (also called a maintenance contract or service agreement) with your heating or air conditioning company.
This brings up a host of questions. Do I need this? How much will it cost me? and perhaps most fundamentally: What the heck is a service contract?
These arrangements are like insurance. If your system goes down in the middle of the night, you call your trusty HVAC guy. Instead of thumbing through yellow pages or googling when you’re supposed to be working, you text your HVAC guy . . .
Ideally, someone shows up at your door– that day. What could be easier? It’s like headache prevention for homeowners.
But if your furnace or air conditioner is new, do you really need a service contract? Many times these agreements cover basic maintenance– stuff like changing filters or cleaning ducts. If you’re somewhat handy around the house, you could do this yourself.
It’s true that manufacturers usually recommend annual or seasonal maintenance, so the service contract could help your case if– and this is rare— you ever need to go to bat with the maker of your system (like Carrier or Trane).
A service contract could also save money in the long term, because a well-maintained system will run better and last longer than a poorly maintained one. Your utility bills could well be lower, as well as your maintenance costs.
From this point on, though, it gets more complicated.
Various levels of service for varying needs
The most basic maintenance plan includes just a yearly or seasonal check-up. Any problems, replacement parts, or labor for repairs would be extra. You can expect to pay $200 or more per year for this type of basic plan. (Important point: You pay each year for a service contract, just like you do for car insurance, whether you use the service or not.)
A ‘basic-plus’ plan would include check-ups, routine replacement parts (like filters) and priority service. Priority service might be worth the extra money if you have a family that’s extra-sensitive to cold or heat (aging grandparents or very young children, for instance).
For premium coverage, which could include all parts and labor for any contingency, you might pay as much as $500/year.
So what’s the magic equation that decides which plan is right for you?
First, is yours a new system? If you’ve just bought a house with a new HVAC system, you probably only need basic maintenance for at least the first few years.
Is your system covered by a factory warranty? If so, a service contract that covers parts would be redundant.
Ask your HVAC guy about the normal charge for routine maintenance. If it would cost $80 twice/year for checkups and filter changes and the service contract is $250/year, it would seem to make more sense to pay for service when you need it. (You won’t forget to schedule the annual check-up, will you?)
You could ask your tech to show you a few things. Basic maintenance is no more difficult than running the lawnmower. Here’s a video for DIY afficionados on how to change the AC filters: (https://www.youtube.com/watch?v=yNTC08Qju9E).
If your heating/AC is old and your repair bills seem to be going up each year, maybe you should consider replacing the system. Before you spend $300-500/year on a service contract, check out pricing and financing for new. Here’s a page from our website on ‘repair or replace’: (http://www.acdoctor.com/get-educated/repair-vs-replace/).
Marrying the HVAC guy
Whether you decide on a service plan or a new system, your choice of contractor is critical. Signing a service agreement is a bit like getting married; you’re stuck with your choice, at least for a while.
Your contractor should be familiar with your type of system. Ask him or her about training, credentials, and membership in industry associations such as ACCA (Air Conditioning Contractors of America). Make sure he or she is familiar with local and federal regulations.
Request a detailed checklist of what is included in the maintenance plan, as well as the names of customers who have service contracts with this company. You want to be sure that your chosen HVAC guy has the resources, the work force, and the skills to perform the required tasks.
If you do opt for a service plan, read it carefully. There may be things you need to do– or to not do– so you don’t nullify the service contract. Ask about priority for service-contract customers. Will you be the first call they answer? Or will they shunt you aside while chasing new business?
Also, ask about multi-year discounts– i.e., 100% fee the first year; 70% the second year; etc. Some contractors offer a discount to loyal customers.
A maintenance agreement can be a win-win for the customer, because it’s in the contractor’s best interest to keep the equipment in good order so he won’t have to cover major repairs in the future (if your contract so stipulates).
To sum up, here are some of the benefits of a service contract:
- Maximize the efficiency of your system
- Conserve fuel and reduce wear and tear
- Save on your energy bills
- Extend the life of your HVAC system
- Minimize expensive and sudden repair jobs
- Clean up the air inside your home by regularly changing filters
- Peace of mind, knowing you are covered in emergencies
Bottom line? If your system is older than five and younger than 10 years old, if you are not handy and don’t want to be bothered with changing filters and other maintenance tasks, if you are concerned about fuel bills, and want clean air and steady temperatures in the home . . . you are a candidate for a service contract.