Cost of an Extended Warranty

The game being played by contractors these days is moving customers away from dwelling on the price at the bottom of the estimate and trying to convince them that their higher priced estimate includes better overall Value.

When bidding to replace your heating or cooling system one of the things contractors offer as an ‘added selling feature’ is an extended labor warranty. Lengths increasing from the standard one-year warranty to two or three and in some cases 5 or even 10-year warranties are being offered.

The one-year labor warranty has historically been the norm and is included primarily as a courtesy should any issue pop up related to the installation itself or if a part happens to fail, both are considered rare occurrences. 

If nothing pops up during the first year, you can usually rest assured that everything is okay and you will not experience any problems whatsoever down the road until your system begins to age.

So, is having an extended warranty really worth it?

If the equipment is properly installed the answer is that you likely won’t ever use an extended warranty. Yes, there may in fact be that one-off occasion when some part might fail and you call for service to replace the part.

Manufacturer’s typically cover parts under their warranty and presuming the part failed during the first year, the labor to replace the part is covered under the standard one-year labor warranty. Aside from a one-off occasion, you probably won’t experience any issue at all with your new equipment.

But why wouldn’t you opt for a company that offers an extended warranty included at no additional cost? The question to ask yourself is – Is that extended warranty actually included at no additional cost or is the cost hidden? 

The truth is yes, there definitely is added cost for contractors to offer extended warranties. Contractors who offer extended warranties generally will add that extra cost right back into their estimate but not list it as a separate line item.

You’ll know it’s there and that you’re paying extra for it when their estimate is higher than other estimates that offer the standard one-year labor warranty.

Is a longer warranty worth paying $1,000 to $2,000 or more extra for your new furnace or AC system? Let’s see.

Say you needed a service call 4 years after the new system was installed and the standard one-year labor warranty has long since expired.

Most manufacturers offer a standard 5-year parts warranty that automatically extends to 10 years when you register the warranty online within 60 days of installation.

So, the part for the service call would be covered by the manufacturer but the part replacement labor would not. How much is the labor going to cost you? Let’s guess $200 or $300 at the most – which may be a high guess.

Now ask yourself this: Is paying thousands more for your system up front worth risking a $200 or $300 service call – that might not even happen?

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