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Are Air Conditioning System Warranties Really Worth It?

IMPORTANT CONSUMER INFORMATION

Learn the truth about the extended warranties offered by many Orlando Florida AC Repair companies

When it comes to AC System Warranties sold in Orlando Fl - Most people do not understand what they are purchasing

A common practice in the air conditioning industry is to sell “extended labor warranties” with a new unit. Companies explain to their clients that when, and if, the unit breaks down that there will be NO COST for the repair.

The fact is that a large percentage of the “policies” will pay a flat fee or a labor rate that is far below what a/c companies charge today.

Recently, we ran a service call at a customer’s home who had a unit installed 3 years earlier, by another company, which was no longer in business. Upon arrival, the customer produced the extended labor warranty “that came with the unit”, and according to the policy, we were to call the 1-800 number for authorization for payment for the repair labor.

This customer had a leak in the condenser coil where the freon had almost all had leaked out, and because the unit continued to run, the compressor burned out also. This is a major repair, and the labor and materials NOT covered by the manufacturer’s warranty was going to be extraordinarily expensive. The good news was, they had an extended warranty to cover these expenses.

Before calling the extended warranty company we all sat at the table and discussed the repairs needed as well as the cost. All we needed to do is call the insurance company for authorization. We made the call to the extended warranty company from the customers home and spoke to them, on speaker, so that the customer would be aware of what would be covered. We always call with the customer present so that they can ask questions directly to the insurance company, and so that ALL parties are clear on the coverage. (Extended warranties are considered insurance policies and are regulated by government agencies). 

Then the bad news hit them like a hammer.

The extended warranty policy they had purchased, as part of the companies “Premium Package”, only covered $68 per hour and did not cover refrigerant (freon), vacuum pumps, reclamation (if needed), nor diagnostics.


We began adding up the money the insurance company WOULD pay and subtracted it from the actual cost.

I thought it would be helpful to actually see the breakdown

COST COVERED
Reclamation of 2 lbs of freon…………….…$185 0
Disposal of contaminated freon……….…….$ 35 0
Coil replacement labor (3hrs X $120hr)…….$360 3 x $68= $204
Compressor replacement (4 X $120hr)……….$480 3 x $68= $204
New refrigerant (9 lbs X $65)……………….$585 0
Diagnostics……………………………………$ 89 0
Leak detection………………………………..$187 0
Refrigerant oil………………………………..$ 70 0
TOTAL COST $,1991 $408

COST TO CUSTOMER $1,583

 

Unfortunatley, the story doesn't end here...

The customer was so upset, they wanted to call a lawyer and sue the company, but being out of business, it didn’t give them that option. So, they were going to find the contractor and sue him personally. Needless to say, when people are this upset, EVERYONE is to blame.

Next, the blame turned toward us, even though we had never been to their home before. In their mind, we were required to do the work for what the insurance company was covering.

We charged the customer for the diagnostics and leak detection and suggested they call other companies for quotes and told them that maybe they CAN find someone to do the work for the $408 offered by the insurance company, knowing it wasn’t possible.

Three days later we received their call asking us if we would do the work and that no one would do the work for that price either. In fact most companies would not even come out when they found out they had an extended labor warranty. They did find one company, and they were $110 cheaper, but were not replacing the oil, and also would not wait the 90 days to get paid the $408 by the insurance company, forcing the customer to foot the whole bill upfront and wait on the refund.

 

The Lesson.

The lesson in this is to read and truly understand the full policy before buying an extended warranty. I have found that the policies that cover refrigerant, diagnostics, and a fair labor rate, often cost $1,000+- for a heat pump split systems. Very few, if any, will cover all of the costs, but as you can see, many are not worth the money you pay.

A better suggestion is to take that extra money and by a higher quality product that comes with a “unique warranty”. There is a brand that far outshines all of these, and it is the Comfortmaker line, owned by Carrier. Comfortmaker Mainline equipment comes standard with a 5 year “NO HASSLE” replacement guarantee. It states that if a coil leaks or a compressor fails, in the 1st 5 years, the faulty equipment shall be replaced, not repaired. The installation company is paid a flat rate fee for this replacement of the unit. If you purchase this system through your local ELITE DEALER, 2 additional years are added giving you 7 years of coverage against these major breakdowns. If you choose the INVERTER line, this replacement guarantee is 10 years, plus 2 more through the ELITE DEALER in your town totaling 12 years replacement guarantee, even after the 10 year parts warranty expires.

 

Things to consider before purchasing an extended warranty on your Orlando air conditioning system

Some of these extended labor warranties are negotiable. You can choose the amount of labor to cover and whether to include the cost of refrigerant. When buying a new unit, and a salesperson tells you that the unit they are recommending has a 10 year parts and labor warranty, STOP…ask for a copy of the extended labor warranty BEFORE YOU BUY.

Companies will tell you that the unit comes with a 10 year parts and labor, but that’s not the truth. There are no units that “come with” a 10 year labor warranty. Most only come with 90 days, and the contractor covers the additional 9 months of the first year as part of what has become the norm in our industry. With the exception of 2 brands that have a 2 year labor warranty on their highest, most expensive products, all labor after the 1st year,
YOU ARE PAYING FOR AS PART OF THE COST OF THE UNIT.

It is not free, or part of the product. Companies must have an insurance license to carry these labor warranties in house. They must have an insurance license, be bonded and/or have reserved assets in case the business folds, for whatever reason. Your policy is a true insurance policy, no different than the policy on your home or auto with minor differences. Most extended labor, or parts warranties, do not have a deductible. In turn they often do not pay for diagnostics, so in a way you are paying a type of deductible.

 

Should you buy an extended labor warranty on your Orlando Florida AC System? How to decide.

First, customers need to understand that all units by the same company are NOT the same. Every brand sold today, makes 4-5 different qualities of the size unit in your home. So, if you have a 4 ton Trane, Carrier, Lennox, Rheem, etc… they all make 4-5 units that are 4 ton. The difference is in the quality and efficiency. You will find a high quality 16 SEER as well as a low quality 16 SEER.

When the consumer receives 2 bids for 16 SEER units, often one is much higher than the other. So naturally, the customer thinks that the lower price company is the best deal, not knowing that they are buying the cheaper made model. It is just as much the other company’s fault for not taking the time to explain the differences and how it will affect the customer long term.

Remember, salespeople are hired to sell. They only make money if they convince you to buy. These days, you must do your own homework, unless you have a long-term relationship with your contractor. If you do, talk to them. If your price seems high, ask why. They know your home and know the things that are needed to make sure your new unit runs efficiently for years to come. If you don’t have a long-term relationship, you are at the mercy of the salesperson, who more often than not, recommends the unit they get paid the most for selling. They are “used car” salespeople, pawning off to you, the consumer, what they have available to sell 1st, and what they make the most money on 2nd.

Many of us remember back to a time when completing an unbiased and honest evalution of any customers home came first, before recommedning any services or products. Calculating the customers future savings based on their electric bill, and MOST importantly, evaluating the existing duct system. Today’s consumer is unaware that the system they are buying, works differently than those of 25 years ago, which is the average age of a duct system in Florida. Most units installed today are running 20-50% less efficient than what they thought they bought. Often 16 SEER units are under 12 SEER efficiency once the final installation calculation is done. Although the unit may be running at 16 SEER, it is often supplying 20-30% less capacity than it was designed to give.

Example: You replace your old 4 ton unit with a new 16 SEER unit. (The brand does not matter.) The duct work will only allow 3 tons of the air into the home because the newer units run on a different pressure than older units. Because the home only supplies 3 of the 4 tons of air, the unit is 25% less efficient. The 16 SEER drops to a 12 SEER, because it must now run longer than designed to cool the home.

REMEMBER THIS VERY IMPORTANT STATEMENT

If the company giving you a bid for a new unit tells you they only need to increase the size of the return duct…STOP… Use your common sense and remember, what goes in must come out. They often increase the return so that the new system will not freeze up from the lack of air going in. If you go ahead with this, and let them talk you into it, you absolutely will burn up the motor in the air handler. (the inside unit)
It may take a couple of years, but you can count on it happening, and will continue to happen every couple of years while you believe it’s a bad unit. Blower motors don’t normally just go bad. It more often than not is a direct result of improper air flow.

COVERING YOUR 6
If you have chosen a company to install a new unit, ask for these few items upon completion. (walk with them taking pics)
1. Pic of the gauges reading the freon pressures before they leave.
2. Pic of the back of the Air Handler to make sure it is sealed
3. Pic of the static pressure of the intake, with filter installed
4. Pic of the static pressure in the supply duct above the A/H
5. Pic of them clearing the drain line with acid

Although there are many other items to be concerned about, the information gathered in these pics will insure proper installation. If ANY of the pics show numbers that are not to manufacturer specs, have them CORRECT IT BEFORE YOU PAY.

(Don’t get worried about the terms below, they are written on the data panels and are easy to find. Take a picture of both and look for the answer)
Pictures
1. Outside units data panel tells the “super heat and sub cool” of the unit. Verify the picture of the gauges are the same as the data panel
2.The back of the air handler is where most leaks come from on new installs because they are difficult to reach. Insure mastic(white putty)
completely covers tape along the entire back. Use a mirror if needed
3 & 4. Most important of all is Static Pressure. This measures the resistance or restriction in airflow through the duct system. Test with filter in place. A MAGNEHELIC Gauge is required for these tests. On the data panel of the air handler(inside unit) a static pressure number is printed. Read the label and you will find it. The average reading for new units is .6 (point six)or below. Adding the supply side plus the return with filter in must not exceed this number. Blower motor faults, premature failures and sweating units can and will occur if not correct.

DO NOT accept any installation where these 3 items are not exactly in line. This will save you $100’s, if not $1,000’s in future repair costs.(if they do not have a device to test static pressure, demand it before payment, you’ll be sorry if you don’t)

***If you are unable to find the readings recommended on the unit, take a pic of the label on each unit, inside and out and contact the manufacturer. You can forward the pictures to them or give them the data over the phone and they will tell you if it is correct. ***

Over 90% of the units installed today fail one or more of these tests. Do not let yourself be a statistic and don’t let someone convince you that it is ok as is. Talk to your manufacturer, and if they say it’s ok, have them send you an email stating so.

WHY SHOULD YOU DO ALL OF THIS?

We have found that the average person will spend over $1,500 on service and repair calls on units still under warranty. The largest majority could have been prevented by following the 5 simple steps above.

Daniel K. O’Bannon
Florida State Contractor
Energy Rater type 1 &2
Mold Assessor
Mold Remediator
11 Awards and Certifications

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