Friday, April 22, 2011

Value service agreements, Home Service Plxx, Annual Inspection...Which one is for me?

Depending on where you live or who you may have invited into your home, there is a good chance you have been offered some type of service geared toward either maintaining your mechanical appliances or repairing them when problems arise.

There are companies, both local and national, that will offer programs for major repairs to a fixed group of appliances in your home in exchange for a monthly fee.  The fee is usually based on how many and what type of appliances are covered under your selected service.

These "programs" can be useful for most people not inclined to getting down and dirty with their washing machine on a Saturday morning because a belt is broken and when you wanted to wash your favorite shirt you instead installed a new swimming pool in the basement.  ~Don't ask....

In this contractors opinion, these monthly service agreements are valuable but only when a
[cost vs. benefit] analysis has been considered under simple scrutiny.  Consider this: The home you live in is less than ten years old, all appliances were installed new at construction and no major problems have arisen to date.  Would you benefit by paying a monthly service fee, some can add up to as much as $40-$75 per month? Keep in mind you will be paying this monthly premium every month, problem or not.  Think of it as insurance for your major appliances, with a repair company ready and willing to come out and fix the problem.

My guess is that many homeowners would consider this service to be useful, especially those of us in older homes with not so new appliances.  I caution my customers to read the fine print, however, and do not assume anything.  For instance, when your 25 year old furnace/boiler breaks down and the cause of the problem is not a simple replaceable component you may be left footing the bill for not only the repair parts but also the labor for the service tech.  And in no circumstance should you consider this a insurance plan geared for replacement should the need to install a new refrigerator or washing machine arise due to complete failure.  The service is only good for repairs of equipment that is otherwise in good working order.

So what is the alternative?

The alternative to a monthly bill and "insurance" program is simple really. Annual maintenance. All of us have been told one time or another "Have your heating/air system checked by a certified technician to make sure it is operating properly", maybe you are one of the savvy homeowners who have actually taken the time to read the appliance manual for this suggestion.....if so, you-da-man!

Having your heating and air conditioning system, water heater or washer/dryer inspected annually in my opinion is the best insurance policy against unforeseen problems.  The great thing about this type of "program" is the offering of these services for a one-time fee.  Should a problem be detected upon inspection you are likely to be charged for the repair but, honest pricing and contractors to go along with it should have you up and running again at a low cost when compared to adding up all those months of paying for a service and then only using it to replace a very minor part.

As my friend Mr. Barba says "Do the math".  If I pay $40 a month under the assumption my repairs are covered (for this example lets say they are actually, covered) for the next six months and find myself without heat, making a call for service.  Maybe the problem is a simple repair, after all our example here tells us the repair is covered, and the cost would have only been around $200 total (maybe something like a standard gas valve replacement)

Service plan scenario: $40.00 x 6 (months) = $240 total out of pocket 
Simple service call scenario: $85 service call fee + $115 (gas valve) = $200 total out of pocket

Remember, this is only a hypothetical situation but the completely perceivable nonetheless.  The math does not add up, in at least this example and many cases the problem would have been addressed during the annual inspection. 

Either situation presents a means to have your problems taken care of.  The "program" will insure you have a company you are somewhat familiar with at your service come out to take a look at and [hopefully] repair the problem with no extra charge to you.  The annual service will address the potential of problems and insure your system is performing properly now, with the option to service any problems should they arise in the future.  I can't make the decision for my customers but, in my experience the annual service offers the best value.

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