Though it’s common knowledge that HVAC extended warranties are a great benefit and form of protection for customers, it’s lesser-known that such warranties offer equal benefits to HVAC businesses themselves. From a standard labor warranty to extended service agreements, this variety of add-on HVAC services could provide customers with new air conditioning equipment a sound peace of mind all while serving as an additional avenue for potential company profit.
However, it’s important to note that HVAC warranties have numerous components for air conditioners and HVAC repairs, all of which company operators must be aware of prior to offering them in a service contract. Keep reading to discover everything you need to know about selling HVAC warranties, including how they can benefit your business.
How Does an HVAC Warranty Work?
When a customer makes the investment to acquire a new HVAC system in their home or business, the professional completing the work often presents them with the opportunity to add an extended warranty. While many may be quick to view this as an unnecessary upcharge for newer HVAC systems, an HVAC extended warranty is extremely important for those looking to preserve the lifespan of their equipment.
When selecting an HVAC warranty program, a customer has several options for comprehensive coverage. Upfront, a customer’s new system comes with manufacturer warranties at no additional cost, which covers unexpected failures and part malfunctions for their system over a set period of time. On average, the largest HVAC manufacturers offer customers 5-year part coverage upon purchase and upwards of 10 years of coverage if they choose to register their product.
Though provided manufacturer warranties are crucial to have, they typically do not cover the labor costs that come with the repair. This is where extended warranty services offered by HVAC contractors come in. By signing an extended warranty in a service agreement, a customer can completely protect themselves from unexpected labor and repair costs accompanying HVAC system issues.
Simply put, manufacturer warranties will cover the cost of repair parts while HVAC extended warranties offered by contractors cover the labor costs associated with the repair.
Are Warranties Profitable?
One main concern contractors may have when looking to offer custom extended warranty solutions is whether or not they will be profitable to their HVAC business. Fortunately, depending on how an HVAC company prices its warranty services for equipment installations, a company can absolutely generate additional revenue by offering such services.
With individual HVAC warranty sales, a contractor must apply a markup on an extended warranty in order to profit from the add-on service. In this way, the company receives profit from each successful warranty sign-up and ensures parts and labor costs associated with offering such extended services will also be covered.
Once an extended warranty agreement is secured, post-sale revenue opportunities will also be more likely, as the warranty-providing HVAC company will be the guaranteed service provider in the event of customer HVAC issues.
Types Of HVAC Warranties
HVAC warranty comparison is quite simple to understand. Generally speaking, there are two types of warranties that can come with a new HVAC system: a manufacturer warranty and an extended warranty.
Manufacturer Warranty
Also known as an equipment warranty, standard warranty, or base warranty, a manufacturer’s warranty is a type of coverage offered by the HVAC manufacturer that comes automatically with the purchase of a new HVAC system. Most manufacturer warranties from major brands like Lennox and Rheem offer a minimum 5-year manufacturer’s warranty that can be extended with optional coverage up to 10 years if the customer properly registers their equipment.
An HVAC manufacturer warranty typically covers the cost of bad parts and system malfunctions caused by a manufacturing error. However, outside of this coverage, additional costs associated with repairs, including labor, service fees, replacement refrigerant, and issues caused by the poor installation, are not covered in a basic plan. This is where the need for an extended, better warranty offered by an HVAC provider at affordable prices steps in.
Extended Warranties
Without adding on an HVAC extended warranty, a customer can still face quite a steep repair bill in terms of labor cost, regardless of what the manufacturers cover. Commonly referred to as labor warranties or extended service agreements, HVAC extended warranties are a service offered by the HVAC contractors themselves to offer customers enhanced system protection.
As mentioned, labor costs commonly associated with HVAC repair can get expensive — sometimes more expensive than the actual HVAC parts themselves. By accepting HVAC extended warranty services from a service provider, customers enhance their system protection to cover repair labor costs and ongoing maintenance and system tune-up costs. The exact amounts of full coverage will depend on the HVAC warranty solution a service provider chooses to include in their service agreements.
Are HVAC Warranties Transferable?
The answer to this question relies on the specific warranty provider the customer or HVAC service provider is dealing with. In many instances, manufacturer’s warranties must be transferred to new homeowners within a set amount of days following a move-out and in addition to paying any necessary transfer fees.
For purchased extended warranty labor coverage, the HVAC company’s warranty provider will often have varying transfer rules but will typically allow such agreements to be transferred to new homeowners.
What Voids an HVAC Warranty?
A customer’s manufacturer’s warranty and extended warranty may be voided for multiple reasons. It’s important for HVAC professionals to educate customers on the various actions that can void their warranty to support ongoing system protection. Common reasons an HVAC warranty can be voided include:
- Improper product registration for HVAC equipment
- Failing to perform routine maintenance on the HVAC unit
- Equipment that’s been improperly installed
- Installation completed by an unlicensed individual
- Use of incompatible HVAC parts
How to Sell HVAC Extended Warranties
Offering HVAC protection warranty services is a great way to ensure customer systems remain fully operational for years to come. However, failing to follow general best practices when offering HVAC can result in missed opportunities and lost profits. Begin by educating yourself and fellow technicians on the details surrounding your warranty services, including what’s covered, how to file a claim, and anticipated customer costs.
Nailing down the right details allows for a more persuasive warranty sales pitch to a new equipment owner following a successful installation. This is also a vital time to explain the potential value of their warranty investment, using examples of what repair and maintenance costs could total without the purchase of extended warranty service. Lastly, as with any routine sales initiative, ensure that you and your technicians remain consistent with your sales effort and be sure to offer such services to all customers.
FieldPulse & Trinity Extended Warranties
With all the extended warranty talk, you may left be wondering what extended warranty service is best for your HVAC company. To significantly benefit both customers and companies, Trinity Warranty provides extended home warranty agreements for HVAC providers that offer flexible pricing and reimbursement rates, and cover all major brands with no need for a deductible. Trinity’s integration with FieldPulse helps contractors stay on top of their customer warranty agreements for the utmost customer satisfaction.
Software for HVAC Businesses
With a comprehensive understanding of HVAC extended warranties, HVAC companies have the ability to ramp up profits and boost long-term customer retention. From managing customer warranty details to tracking financial data, FieldPulse can help you manage all customer data to ensure strong and long-lasting client relationships. To better understand how we can help streamline your warranty management processes, contact FieldPulse to schedule a free demo today.
