There’s a lot in the fine print

Pushpa Girimaji

Last year, I bought an air conditioner with an overall warranty of a year and an additional warranty of five years for the compressor. Now the company wants me to take an annual maintenance contract (AMC) for three years, at a cost of Rs 9,000. The company representative says that this will cover free replacement of certain parts and nine free servicing (three per year). He says the air conditioner requires three to four servicing in a year and I would end up spending a lot of money on servicing and also replacement of parts if something were to go wrong. I am very confused and need urgent advice on whether or not to buy the AMC. 

First and foremost, ask the company representative to give you a copy of the AMC and read it carefully and fully. Once you do that, I am sure you will be able to make up your mind about the AMC because the company’s representative is painting a rosy picture of the AMC and saying that it covers free replacement of parts. But what parts are they? They could well be some inexpensive parts. The AMC terms will also tell you what it will not cover and I am sure that list will be longer than what it covers! So, do not go by verbal promises.

Second of all, I must point out that the most expensive part in an air conditioner is the compressor and you have a warranty on it for the next four years. As for servicing, as you use it only during the summer months, I really do not see why you should get it serviced three to four times a year. Once a year before summer should be adequate and you can yourself take out the filter and clean it a couple of times during summer.

Third, I really do not see anything major going wrong with the air conditioner in the first three years, requiring heavy expenditure for repairs. In fact, companies are only too well aware of it and hence offer these services to make a neat profit. So, I would suggest that instead of paying Rs 9,000 for the AMC, you keep aside that money in your savings account and if any such eventuality were to occur, you can use it. Even if you take out the expenses on annual servicing of the air conditioner from this amount, you will still be left with Rs 7,000 to Rs 7,500.

Are you saying that these annual maintenance contracts and extended warranties are not worth buying?

Like I said, that depends on the terms of the contract and here I refer specifically to the fine print that lists the exclusion clauses and, of course, the cost of the contract, the appliance, its age, etc. Recently, a reader told me about how he was denied free refilling of gas promised in the AMC because the exclusion clause said that it would not cover ‘accidental damage’ or breakdown caused on account of transportation of the air conditioner (while shifting house) . He had not read the terms and was not aware of it. So despite the AMC, he had to pay for refilling of the gas in the air conditioner.

Remember, so long as your machine is under the manufacturer’s warranty, you may be forced by the warranty conditions to approach only the authorised service centre. However, once that period is over, you have an option of choosing from service centres that may be more competitive in respect of quality as well as price. So, by buying an AMC, you are denying yourself that option. Besides, many of these services are outsourced by the manufacturers and having made the payment in advance, you have no option but to take their service, even if it is terribly deficient.

I must also add that, these days, technology is changing so fast that appliances become obsolete very quickly and manufacturers do not provide support services such as spare parts for models that have been discontinued with. So instead of buying an AMC, it makes sense to keep aside that money for a new machine at a later date. One must also keep in mind the fact that these appliances are becoming cheaper and more efficient over the years.