What Is a Warranty and the Types

Warranties

In simplest terms, a WARRANTY (also called a guarantee) is an agreement between a seller and a buyer to ensure that a product will work properly. Warranties promise that a product will perform properly; when a product fails to perform, it will be replaced or repaired, or the consumer will be given a refund or a credit toward another product. While the concept is simple, the actual application of a warranty can be quite complex.1

How do you know whenextended warranties are unnecessary and which warranties provide real value? It is important for consumers to read and understand the terms and conditions offered at the point of sale.

ExtendedWarranties

Optional extended warranties may be purchased along with the sale of the covered product. Typically, the term of these agreements provide assurances that any required service and parts will be provided in the event of a breakdown or malfunction of the covered product.
The majority of extended warranty agreements available for HVAC equipment, such as those B&W provides through American Standard, require periodic inspection or preventative maintenance in order to maintain the warranty. (See the preventative maintenance schedule toward the end of this article)

As it applies to American Standard equipment…

The dealer purchases a manufacturer’s extended warranty directly from the manufacturer. It is specific to the customer and the equipment. The dealer then submits the customer’s information along with the model and serial number of the equipment. American Standard then mails a copy of the warranty to the homeowner. American Standard recommends all maintenance and service work be performed by a professional air conditioning and heating dealer that holds the appropriate credentials to install and service air conditioning and heating equipment.

What you need to know…

Some companies do not actually purchase the extended warranty from the manufacturer.

They intend to cover the parts and labor costs themselves if a problem occurs.

Here is the problem. If the company is sold or goes out of business the homeowner has no extended warranty. If the company is covering the cost themselves, they may be inclined to determine that a certain repair is not covered. Make sure they intend to and actually do purchase the manufacturer’s extended warranty. If they do, you will receive documentation from the manufacturer. This will confirm your extended warranty; enabling you to transfer it to a new homeowneror carry service with a different dealer.

If a manufacturer does not offer extended parts and labor warranty, it is because they know they will lose money. To offer 5 and especially 10 year extended parts and labor warranties, the manufacturer has to be confident in the quality of their equipment.

Here are some of the variations we have found during the 50 years we have been in business.

As indicated above companies tell the customer they are providing extended warranty but do not purchase it from the manufacturer.
Some companies offer the basic manufacturer warranty and an in-house 2-year labor warranty. A 2-year labor warranty is required by law in the state of Indiana. It should not be sold as an added benefit or feature.

Third Party Warranties

There are third party companies that will sell warranties on just about anything. Through the years we have tried numerous ones; they all went out of business.

It is our recommendation not to purchase any third party warranties.

A third party warranty is not the same as a home warranty. There is much more risk involved. They are often an out-of-state company. Third party warranties are often non-transferrable. Not to mention there are a large number of scam warranty companies out there that sell worthless contracts.

If you buy from a third party company, and something goes wrong, you often find the third party reluctant to fulfill the warranty based on some loophole or some fine print detail they cite in the contract to deny coverage.

Home warranties

There are basically 2 types we have encountered. The type that comes with a home purchase and the type offered by the utility companies.

Home warranties that come with purchase of a home…

We have found these companies excel at preventing you from using them.
They have numerous pre-requisites
They pay so little, they cannot attract reputable high quality companies with insurance and licenses. Is that who you want to work in your home?
The claims process is designed to make the homeowner give up.
If you pay next to nothing for the warranty, don’t expect to get much in return.
Document everything; Know the rules and procedures before you have a claim.
Read the fine print.

Home warranties offered through the utility companies…

We have found these companies to be much easier to deal with. They pay well and quickly to the contractor. Quality contractors are willing to work for them.
Be sure to know what is covered; they have different plans available.

Points To Remember2

Whether full or limited, each warranty must provide the following information in plain language:

What the warranty does and does not cover;
A step-by-step procedure the consumer must follow to obtain services;
A description of what repairs or replacements will be made if the product is faulty; and
A description of what expenses the consumer, and the manufacturer, will pay on a faulty product.

Read a warranty carefully to find out what is, and is not, covered.

Comparison shop for warranties as you would for products because warranties vary widely in what they cover. To compare warranties, ask the following questions:

How long does the warranty last?
Is the warranty full or limited?
What parts, labor, or potential problems are expressly excluded? Is any part or problem not mentioned at all?
What will the manufacturer do if the product has a defect? What are your responsibilities? Is there a toll-free number for service and/or a list of local repair shops?
Is there a parts manual for do-it-yourself repairs and are parts available locally?

Warranty service requirements are important.

Does the product have to be packaged in its original materials?
Is there a local repair shop? If not, where will the product have to be shipped?
How long will the repair servicing take?

Warranties may not be transferable to other owners, so make sure you know who is covered. (For example, if you want to sell your lawn mower that is still covered under its manufacturer’s warranty, the warranty would extend to the next owner only if allowed by the warranty.)

Preventing Problems2

To minimize the chance of a problem with your warranty, take these precautions:

Consider the reputation of the company offering the warranty. If you are not familiar with the company, ask your local or state consumer protection office or Better Business Bureau if they have any complaints against the company. A warranty is only as good as the company that offers it.
Before you buy, read the warranty. See exactly what protection the warranty gives you.
Save the sales slip and file it with your warranty. You may need it later to document the date of your purchase or, in the case of a warranty limited to the first purchaser, that you were the original buyer.
Perform any maintenance or inspections required by the warranty.
Use the product according to the manufacturer's instructions. Abuse or misuse of the product may cancel your warranty coverage

Questions to keep in mind when comparing warranties2

WHAT PARTS AND REPAIR PROBLEMS ARE COVERED BY THE WARRANTY?

Check to see if any parts of the product or types of repair problems are excluded from coverage. Are any expenses excluded from coverage? Some warranties require you to pay for labor charges. How long does the warranty last? Check the warranty to see when it expires.

DOES THE WARRANTY COVER "CONSEQUENTIAL DAMAGES"?

Many warranties do not cover consequential damages. This means that the company will not pay for any damage the product caused, or your time and expense in getting the damage repaired. For example, if your freezer breaks and the food spoils, the company will not pay for the food you lost.

ARE THERE ANY CONDITIONS OR LIMITATIONS ON THE WARRANTY?

Some warranties only provide coverage if you maintain or use the product as directed. For example, a warranty may cover only personal uses — as opposed to business uses — of the product. Make sure the warranty will meet your needs.

WHO DO YOU CONTACT TO OBTAIN WARRANTY SERVICE?

It may be the seller or the manufacturer who provides you with service.

WHAT WILL YOU HAVE TO DO TO GET REPAIRS?

Look for conditions that could prove expensive, such as a requirement that you ship a heavy object to a factory for service.

WHAT WILL THE COMPANY DO IF THE PRODUCT FAILS?

Find out if the company will repair it, replace it, or return your money.

Preventative Maintenance Checklist (American Standard)

Many dealers provide priority service for their customers who have an annual maintenance or service agreement. Bi-annualpreventative maintenance will ensure that your system runs as efficiently as possible. The dealerwill perform the following tasks,depending on the unit:

Outdoor Units

Inspect unit for proper refrigerant level and adjust if necessary
Clean dirt, leaves and debris from inside cabinet
Inspect base pan for restricted drain openings—remove obstructions as necessary
Inspect coil and cabinet—clean as needed
Inspect fan motor and fan blades for wear and damage—on older models lubricate as needed

Inspect control box, associated controls/accessories, wiring and connections. Controls may include contactors, relays,circuit boards, capacitors, sump heat and other accessories.
All control box and electrical parts should be checked forwear or damage.
Inspect compressor and associated tubing for damage

Indoor Units

Inspect and clean blower assembly (includes blower housing, blower wheel and motor)
On older models, lubricate motor and inspect and replace fan belt if needed
Check combustion blower housing for lint and debris and clean as necessary
Inspect evaporator coil, drain pan and condensate drain lines. Clean as needed
Inspect for gas leaks in gas furnaces
Inspect burner assembly—clean and adjust as needed
Inspect ignition system and safety controls—clean and adjust as needed
Inspect heat exchanger or heating elements
Inspect flue system—check for proper attachment to the furnace, any dislocated sections, and for signs of corrosion. Replace if necessary.
Inspect control box, associated controls, wiring and connections
Clean or replace air filters
Inspect conditioned airflow system (ductwork)—check for leaks

While Your System Is Operating

Monitor system starting characteristics and capabilities
Listen for abnormal noise
Search for source of unusual odors
Monitor air conditioning and heat pump systems for correct refrigerant charge
Measure outdoor dry bulb temperature
Measure indoor dry and wet bulb temperature
Measure high and low side system pressures
Monitor gas furnace for correct line and manifold gas pressure—make adjustments as needed
Measure temperature rise and adjust airflow as needed
Check vent system for proper operation
Monitor system for correct line and load volts/amps
Monitor system operation per manufacturer's specifications
Provide system operation report and recommend repairs or replacement as necessary

2 Author Unkown, “Warranties”, From Indiana Dept of Financial Institutions, Online Publication. Retrieved November 12th, 2012, from