Are HVAC Service Contracts Worth It?
Last updated November 2019
Rather than paying for individual maintenance visits and repair jobs, you can get a service contract for your heating and air-conditioning equipment. Many companies try to persuade customers to get them to do this.
If you are interested in a service contract, compare the prices and coverage of various contracts. Service contracts fall into three broad categories:
- Contracts covering only the labor cost usually of either annual or semiannual planned maintenance visits to check, clean, and adjust equipment.
- Contracts covering the labor costs for planned maintenance visits and for unplanned repairs.
- Contracts covering labor costs for both maintenance and repair visits plus costs of selected parts.
Within these categories, coverage varies. First, there are contracts for furnace only, for air-conditioning equipment only, and for the two combined. Second, some contracts cover work that others exclude. Among maintenance-only contracts, the most common exclusion is the cost of cleaning air-conditioning coils. Among contracts covering labor and/or parts for repairs, exclusions range from such costly work as replacing a compressor to much less expensive items like capacitors. Request copies of the contract forms for any company you consider.
The differences in contract prices are striking. For example, the cost of one level of coverage for one year ranged from less than $100 to more than $400 among companies we shopped.
To compare the value individual outfits offer, look at companies that cover roughly the same items. Also, check what companies do on maintenance visits—for example, do they clean the air-conditioning coils? And keep in mind that some companies may offer 24-hour service while others are hard to reach outside regular business hours.
You’ll probably do better by not buying a service contract and paying for repair and service bills each time you need work. But three main reasons to buy a service contract—
- To perform preventive maintenance;
- To get priority service if you have a breakdown; and
- To insure against the costs of sizable repairs (to the extent that repair costs are covered).
Some companies swear by these contracts, arguing that they facilitate efficiency by allowing them to schedule work when demand is low, thus letting them avoid paying overtime during peak load periods and employing excess personnel to prepare for peak demand periods. Other companies say contracts are little more than ploys their competitors use to ring up extra profits at your expense. They insist that service contracts waste your money and a company’s time by encouraging unneeded maintenance visits and emergency calls. There’s some truth in both views. The right answer for you depends on your circumstances.
If you need professional maintenance visits every year—if, for instance, you have a large house or don’t want to perform even the simplest maintenance tasks yourself—a service contract may be right for you. But don’t pay more for the contract than you would pay for the number of visits it includes at regular labor rates.
If you need maintenance visits less than once a year, paying for them one-at-a-time may work for you; the only reasons to get a service contract would be to get priority service on unscheduled repair calls or as insurance for costly repairs. (Unfortunately, local services seldom offer these protections unless you pay for maintenance visits as well.) But these protections may not be worth the price of a service contract.
Some consumers buy service contracts because they hope to get priority treatment on unscheduled repair visits. But getting a service contract still may not protect you. Furnaces and air conditioners most often break down when the weather is extreme, and companies simply lack sufficient staff to handle the demand. Although they do put their technicians on overtime and send supervisors into the field, sometimes they just can’t keep pace—even for their priority customers. In fact, one of the most common complaints we receive from readers is waiting weeks to get an appointment for repairs from companies with which they have signed service contracts. For quick service, you might do just as well without a service contract. Whenever you need repairs, call a few companies and hire the one that will come soonest.
If your objective in getting a service contract is to insure against expensive repair bills, check the price of any contract that offers that level of protection. And remember: The most costly repairs—replacing compressors and heat exchangers—are not covered by most service contracts.
A final important point: If you want a service contract, take care in choosing the company. We get a lot of complaints from consumers who buy service contracts and find that technicians discover something to repair on every service visit—at extra cost. Some contractors seem to use service contracts as twice-a-year opportunities to squeeze customers for unnecessary repairs.