ESAs extend the manufacturer's warranty on expensive HVAC / R / plumbing equipment, and protect against unexpected and untimely costly repairs. We can cover all brands and types of equipment.Read more
If you have considered offering an extended warranty with your air conditioner or furnace installations and weren’t sure exactly how they work, you are in luck. We will go through extended warranties in detail. We will focus on the most common way contractors offer extended warranties which is using a third party. The third party is tasked with handling compliance, legal, insurance, and claims. Many if not most manufacturer programs also use third parties to administer and provide labor extended warranties. Just to name a few: Lennox, Carrier, Bryant, Mitsubishi, Fujitsu, LG, and Ecoer. These programs come by many names such as “HVAC protection plans” “Premium protection plans” “HVAC extended labor warranties”, and others but they all refer to extended service agreements or ESAs.
When contractors install a new HVAC system it typically comes with a 10 year parts warranty from the manufacturer that covers the replacement of parts if they fail within that time frame. The manufacturer’s warranty does not cover the labor associated with making those repairs. If an HVAC compressor were to fail, the contractor would charge the customer for the labor associated with the compressor replacement. If the contractor had included an ESA with the installation of the system, the contractor would not need to charge the homeowner for the repair. After the contractor would replace the compressor they would submit a claim to the ESA provider and get paid for the repair.
The most common repairs that are covered by an ESA can be broken up into 5 categories: AC Condenser/Heat Pump Condenser, evaporator coil, furnace & air handlers, thermostat, and miscellaneous. The labor coverage for replacing or repairing parts includes: Compressor & Drier, Condenser Coil, Contactor, Capacitor – Run/Start/Split (start assist), Accumulator, Fan Motor, Reversing Valve, Defrost Board/Control/Timer, Crank Case Heater, Fan Blade, Schrader Core, Leak Repair or Replacement of the evaporator coil, Liquid Line Solenoid Valve, Expansion Valve, Heat Exchanger, Blower Motor, Control Board, Thermal Expansion Valve, Pressure Switch, Transformer, Gas Valve, Flame Sensor, Thermostat, CAD Cell, Couplers, Door Switch, and Fan Sequencer or other relay. This isn’t an exhaustive list but one that incorporates the most common repairs.
Contractors still need to make sure that they have properly installed a new HVAC system. An ESA does not protect the contractor or homeowner from any repair resulting from a faulty installation. ESAs also do not cover predictive failures. For example, if a contractor notices that a contactor may be going bad, but has yet to fail, he will not be reimbursed unless that contactor actually fails. Other exclusions include: repairs resulting from lack of proper maintenance, adjustments and resets to the equipment, acts of God (earthquake, flooding, lightning, hurricane, etc), war, and terrorism.
The homeowner also has his part to play in all of this. Most homeowners work with their contractor to help them maintain their systems but if the homeowner is a “Do it yourselfer,” he needs to maintain the unit himself. Normal care and maintenance includes but isn’t limited to, cleaning the condensing and evaporator coils, drains, burners or heat exchangers, and regular filter replacement or cleaning. Maintenance must be performed in accordance with manufacturer specifications.
Labor coverage ranges in the number of years. The shortest duration of coverage a contractor can purchase is 1 year and many states actually require the contractor to offer at least a year with every install. The most common coverage periods available are 1, 2, 3, 5, & 10 years.
When a contractor makes a covered repair, he needs to complete the claims process. The claims process can be completed online, via email, or via mail. In addition to a claim form that provides contractor, homeowner, equipment, and repair details, the contractor needs to submit a work order or invoice with a customer signature and receipts within 30-60 days from the failure date. Once the claim and documentation is received the claim is processed and sent to the insurance company for payment. It typically takes less than 30 days for contractors to receive payment for the repair.
Contractor reimbursement rates & the cost of providing coverage is dependent on several factors. Every ESA provider has their own pricing and reimbursement costs. The majority of providers have different reimbursement rates that you can choose from, and are tied into the pricing of the coverage. Reimbursement is based on parts allowance, trip charge reimbursement, hourly rate, and hourly repair schedule. Make sure to look at specific total reimbursement rather than just hourly rates.