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What are HVAC Refrigeration & Plumbing Extended Labor Warranties and How do They Work?

This video provides an overview of extended warranty products, their usage, and why they are popular among contractors today.

Video Transcription

Are you asking yourself whether you should start offering or including extended labor and/or parts coverage with your installs? In this video, I will be providing an overview of what exactly extended warranty products are, how they are used and why contractors are using them today.

Extended Warranties are available to contractors in HVAC, Refrigeration, Electrical & Plumbing trades. I will be giving an overview from the point of view of a residential HVAC contractor but these products work the same across the trades and in both commercial and residential applications.

Parts Warranty vs. Extended Labor Warranty

To best understand extended labor warranties let’s consider a manufacturer’s parts warranty. Most heating and air manufacturers offer 10 years’ parts warranty with the new system. 5 years out of the box, which extends to 10 years if the equipment is registered. The 10 years’ parts warranty covers parts failure for the 10-years.

Generally, the manufacturer will not pay for the labor associated with making that repair. For example, if the contractor discovered during a service call that a blower motor went out and they needed to replace it, assuming it was still under warranty, the manufacturer would provide the new motor but the contractor would still need to invoice the customer for labor.

That invoice would include their time to get to and from the home and/or supply house, time that the contractor needs to figure out what is wrong with the system and the time it takes to make the repair and make sure the system is working properly after the repairs are made. This falls on the shoulders of the equipment owner.

Now just like the manufacturer covers the cost of parts associated with repairs, Extended Labor Warranties, cover the costs of labor associated with repairs. A quick side note, extended labor warranties are actually more accurately called extended service agreements, but since the majority of people call them extended warranties so will we in this example.

For more details on Trinity Warranty for contractors visit ESAs designed for Contractors 

Benefits of Extended Labor Warranty

In the case, we just described with the motor replacement, if the contractor had included an extended labor warranty when they installed the HVAC system. The contractor would not charge for labor for the replacement of the motor. The cost for both the labor and part would be covered.

The manufacturer would provide the new motor and the extended labor warranty would reimburse the contractor for the labor. Extended labor warranties are designed to complement the manufacturer’s warranty by providing labor reimbursements to the contractor for covered repairs. This in turn allows the contractor to provide both parts and labor coverage to their homeowner when they sell them a new system.

Extended labor warranties on new HVAC systems are generally not sold to homeowners directly. If a homeowner wants both parts and labor coverage with their install and the contractor does not offer it, they may lose the install. Enrolling to offer extended warranties is free & quick. There is really no reason not to enroll and at least have it as an option.

Enrolling in Extended Labor Warranties

Once you are enrolled you will register your account and can order online. Through your company portal, you will be able to purchase the years of coverage that fit your business and market. If you choose to offer 5 years of labor you order 5 years with your next install. If you choose to offer 10 years then you purchase 10 years of coverage. You will also have the option to pick reimbursement rates that fits your business.

The cost of coverage varies depending number of years you are looking for and your desired reimbursement. Once you find the coverage that best fits your business you can figure out your cost and add that to your install along with the margin you would like to add. All your orders are saved in your portal and you are able to pay for your orders online with a credit or debit card.

Filing Claims for Extended Labor Warranties

When it comes time to honor the extended labor warranty. The contractor would make the covered repair at no cost to the customer. He then would log into his contractor portal and bill Trinity Warranty for the repair by filing a claim. Filing a claim can take less than 5 minutes.

For more details on Trinity Warranty for equipment owners visit ESAs designed for Equipment Owners