What are the Advantages of Service Contacts.

A good contract with a good company can provide peace of mind against future product failure. It allows the product purchaser to pay a reduced amount in advance to protect against a failure that may or not occur. When a failure does occur, your complex product will more than likely be repaired by a skilled technician familiar with that unit. Also, all or most of the costs of the repair will be covered. This means that a possibly costly repair will not strain your household budget.

How do Service Contacts differ? Service contracts vary widely. The most ideal service contract should cover all parts and labor to repair any failure at no additional charge. However, some may cover only parts; only service; or a combination of the two. Some may require additional payments for service. In some service contracts, only parts that receive regular wear or are consumer-replaceable are excluded. In others, repairs to very expensive internal parts may not be covered. A contract may cover needed cleaning, lubricating and other preventive maintenance to avoid a more serious problem; or it may not pay for this under any circumstances. Some contracts pay for service in your home, including pickup and delivery if it has to be repaired at the service center; some do not. You may renew some, but not others, as your set gets older. Some require that all such products in your home be covered. Generally (but not always), the contracts with the most coverage are the most expensive.

What kind of plans are there?
There are several types of plans to meet varying needs, but they basically fall into the following categories:

What should you look for in a Service Contract?
Make sure the service contract fits your needs. But, don't be misled by the name of the contract. Compare extended service coverage with the terms of the original warranty. You may prefer lesser coverage if the policy is significantly less expensive; but, be sure. Check for exact coverage before purchasing:

Specifically, what is covered and what is not?
  1. Are you paying to duplicate any of the manufacturer's warranty?
  2. All parts? All labor? Home service and pickup and delivery?
  3. Are there any exclusions? Are additional payments required for any services? How much?
  4. What companies will be able to do the repairs?
  5. Will you have a choice?
  6. Where are the repair facilities located?
  7. Is the policy renewable?
  8. At what cost?
  9. Is it valid if you move?
  10. Is it transferable if you sell the product?
  11. Is the contract insured? In full, with no deductibles?
  12. Is the name of the insurance company shown on the contract?
  13. If possible, compare more than one service contract and ask the opinion of an independent servicer. Never just take the salesperson's assurance; read the complete contract, including -- especially -- the fine print. If you can't understand what you read, don't buy it.
  14. Finally, make sure that all blank lines and spaces are filled in before you buy. And be sure to get a receipt for the service contract.
Who Guarantees the Contact?
No matter how much coverage a service contract offers or how inexpensive it seems, it is worthless if you can't find anyone to honor it when you need service. A number of service contract vendors including retailers, service centers, and service contract companies have gone out of business, leaving consumers without the coverage they paid for:
Ask the selling dealer if they will honor the service contract if the third-party contractor goes out of business. If so, get it in writing. Inquire of your local or the national Better Business Bureau or other consumer protection agency about all parties listed on the contract. Also, get the opinion of your regular service company. If the third-party contractor is a member of the Service Contract Industry Council (SCIC), they are required to provide certain disclosures. Disclosure statements, alone, however, do not guarantee the financial solvency of a program or company. SCIC does not guarantee the ethics or solvency of a member company but they do provide an extra avenue of recourse if a dispute involves a member service contractors. (The address is listed at the end of this document.)

First, be sure that the unit is at fault, so you don't have to pay for the service. Be sure the power and any antenna, video, audio, or cable plugs are connected. Consult your operations manual for hints on consumer-adjustments and operations. If possible, connect another unit or a lamp to the receptacle to test the power source. Do whatever you can to be sure that the unit, itself, is at fault.

Most warranties or service contracts do not cover services that are not product fault-related; that is, they do not pay for services to connect or adjust equipment or if the trouble is elsewhere (as in a bad videocassette, cable company failure, trouble at the transmitter, faulty computer program, lint in the dryer filter, etc.). Remember that, if someone checks your unit, especially if they come to your residence or office to do it, and the fault is not with the unit, you will probably have to pay for the time and labor to check it.

Whatever you do, don't be tempted to go into the unit to make repairs or internal adjustments. If you break something or create additional problems, you may void all or part of your warranty and/or service contract coverage. Besides, the sharp edges and voltage that are present in most appliances and electronic equipment are very dangerous and the current can even be fatal.

Is the name of a service center is indicated on the contract or a list of names included with the papers? Is there a telephone number of the manufacturer (if in warranty) or the service contract administrator? If not, and if you have a regular repair company that you trust, call to see if they are authorized to repair your unit for the manufacturer or the contract administrator. If not, call the store where you purchased the unit or the extended service contract. If that doesn't work, and if it's in warranty, look in the Yellow Pages telephone directory; first under that product category (television, audio, freezers, etc.). Then, look for the list of those performing "authorized service" under the manufacturer's brand.

Yes. Even if you are dealing with the store where you bought the product or with a company that you normally trust for service, it's a good practice. The company could suffer a disaster (fire, flood, theft) or go out of business.

Make sure the receipt lists:
An "estimate" is defined as "an opinion or judgment of an approximate value." However, many people think of an "estimate" as a quoted fixed price. A "guesstimate" is what many servicers refer to as a reasonable, non-binding estimate of the cost of repairs, or a general range of anticipated repair costs. It is an educated guess, based upon the symptoms compared to the company's basic repair rates of the probable minimum and maximum cost of repair.

It is virtually impossible to offer an exact quote of the total repair costs until the unit, the mechanics, and/or the circuitry are fully inspected and the product restored to its basic operation. In other words, it has to be repaired before anyone can know exactly how much it will cost. By then, considerable expert technical time, the use of expensive test equipment, and even some replacement parts may have been irretrievably expended. Since these extensive business costs must be recovered by the company, the service center will usually charge a flat, minimum fee to prepare an exact price quote or a detailed analysis of the probable repair costs. (This is what some people expect an "estimate" to be.)

However, most service organizations will gladly inform you, ahead of time, the range of costs normally involved in such a repair as well as how much the diagnostic fee is. (This should be the maximum it will cost you if you receive a detailed repair price quote and decide not to complete the repair.) In some cases, this minimum fee must be paid in advance. But, be sure to get this "estimate" in writing.

It's important to check on the financial viability of any company before you spend your money. Afterwards, it's usually too late. For more information on how to check on a service company's probable stability -- and on choosing a service company for out-of- warranty and non-contract repairs -- request the NESDA pamphlet, "Consumer Checklist for Electronics Service," from your NESDA- member service dealer. You may write or call NESDA for the name and address of the NESDA-member service centers nearest you. Or, send a self-addressed stamped business size envelope with your request to NESDA at the address listed at the end of this document.)

When a manufacturer, service contract company, retailer or service center goes out of business, you will most likely lose any warranty, contract coverage or other guarantees. (The exception would be if the contract is backed by a legitimate insurance underwriter.) If a manufacturer or service contractor does fail, check with the company where you purchased the product or service contract. In some cases, the promised services may be wholly or partially assumed by the retailer, the contract seller, or another service contract company. In some cases, the law may hold one or more of them responsible. Another avenue is to ask your usual service dealer for advice. Look on the policy to see if it was insured. If so, try to find out the name and address of the insurance underwriter. Then, contact the company.

Try to find out the name and address of the insurance underwriter for the contract. If you still don't get results, check with your city or state consumer affairs agency or equivalent, or with the state attorney general's office. In some states, warranties and guarantees are treated as insurance, so you might also check with your state insurance commissioner. If the retailer or service dealer goes out of business and the guarantee is from one of them, this will also most likely be lost. However, check with other retailers of the same brand as well as with other carefully selected service centers. Finally, check with your city attorney's office or local or state consumer affairs departments (or equivalent).

If you are unsure of the existence of a manufacturer, inquire of the Electronic Industries Association's Consumer Electronics Group. If it's a service contract company that you seek, direct your question to the Service Contract Industry Council. Or, a single source of information about either group is NESDA, the National Electronics Service Dealers Association, Inc. Their addresses are listed below:

Consumer Electronics Association (CEA)
2500 Wilson Blvd.
Arlington VA  22201-3834
(703) 907-7600

Service Contract Industry Council (SCIC)
204-B S. Monroe St.
Tallahassee FL 32302-3068
(850) 681-1058

National Electronics Service Dealers Association
International Society of Certified Electronics Technicians
3608 Pershing Ave..
Fort Worth TX 76107-4527
(817) 921-9061
Fax (817) 921-3741