Furnace Maintenance Contract - Consensus

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A guy from the gas company was at my home last week for a routine inspection and while he was here he tried to upsell me on a maintenance contract for my furnace to the tune of $10 (CAD) per month.
Mine is a high efficiency furnace of about 12 years of age. It has cost me nothing but replacement filter costs during this time. He sited a couple items that were due or likely to fail (exhaust blower, circuit boards, sensors), that if I were on the contract would be covered for materials and labour to repair. His pitch basically was that if only the exhaust blower needed replacement at an approximate cost of $900 (CAD), the contract would be justified for years to come.
So, I solicit your opinions. What sorts of repair costs would be commonly associated in maintaining a furnace in the 10 to 20 year range of its life. Is such a contract a cash cow for the gas company, or something of reasonable value to the consumer?
Dave
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David Radlin wrote:

For a start, I would contact a local contractor, tell them exactly what you have and ask them how much they would charge to replace the "exhaust blower." My guess is it will be a lot lower than $900. That should tell you all you need to know about the company trying to sell you a contract.
Frankly my furnace is also about 12 years old and I would not want to put any serious money into it. I would rather replace and upgrade what I have.

--
Joseph Meehan

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David Radlin wrote:

I think one could safely assume that the contracts make money for the issuer, otherwise they wouldn't offer them.
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Yes, and insurance companies make money writing insurance policies (we all have insurance policies of some sort).... of course their point is to make money, and I don't deny any company a reasonable profit. The question relates to whether the cost of $10 per month is reasonable in consideration of the cost one might pay to maintain such a piece of equipment, or exorbitant and unlikely in average terms to see a payback.
Dave
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David Radlin wrote:

I think the cost is reasonable. But $10 / month put aside as a reserve for replacement of your 12 year old system might be a better investment.
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Is a 12 year old system "old" by generally accepted terms? I would have thought not. Perhaps I am ignorant but I would expect the life of one of these things would push 40 plus years with the occasional component replacement. I'm thinking that lots of things would have to fail in concert for replacement to ever be cheaper than fixing (or many things pending failure).
Considering that the subject unit is of high efficiency, the same service man that was upselling me could offer no reason to replace the unit in the next 15 years assuming it is functional. Replacement generally would make sense if it was a low efficiency unit and the energy savings would pay back the replacement cost.... if it is high efficiency and working don't replace it.
What components commonly fail in these things and what are the major component design lives?
Oddly, the contract is perpetual and so is the vendor's committment to repair the unit provided that parts are available.
Dave
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David Radlin wrote:

According to Appliance magazine the average life of a gas furnace is 20 years. YMMV.
In my experience the failure modes are the flame sensor, the ignitor, the gas valve, limit switches, the inducer motor and the heat exchanger...not necessarily in that order. On furnaces with electronic controls the control modules are subject to failure.
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to
And the vendor is still in business. $10 a month seems like an awful lot to pay for what amounts to a very limited insurance policy from a provider that isn't rated with AM Best, et. al.
Matthew
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The other thing to ask is:
What does that contract cover? Would it even cover that "$900 exhaust motor"????
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The contract covers failure not attributable to neglect, and does not cover the burner/heat exchanger (terms?).... in an nutshell. But, the burner/heat exchanger is under a 20yr (pro-rated) warranty from the OEM. And yes, the exhaust blower is under the warranty.
Dave
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High for a new unit that probably will not need a repair soon. Not too bad for an older unit that may have a problem coming up. If I was to put that money in the bank, I'd have enough saved to buy a new unit if mine failed today. One service call in 24 years (I do have annual cleaning though.)
I've never bought a service policy on anything except my first power mower because my son was just at the right age to cause a problem. Had it for a year and came out ahead. Dropped it after that.
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Crunch some numbers. Like a previous post, it may well pay to upgrade rather than repair when your furnace goes south. High efficiency models may recoup their cost in 5 years compared to your current model usage. The cost to repair may be in line with the contract ($120/yr) after you check prices of buying a motor and doing it yourself. Make sure other "likely to fail" components are covered also, like circuit boards, capacitors, heat exchangers, heating elements. In the end, insurance is always a catch22, you want to spend for it and then hope you really never need it. If there is some other guarantees like "fix-it-in-24 hrs" or absolutely no costs then it may be worth your "lack of hassle". Check the fine print, some may say they will fix it or return your money instead (not fun to loan someone else your money and get your original investment back).
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$900.00 for an exhauster motor? Ouch, that's steep! The 10.00 doesn't seem too bad, but I think I would put that into a new furnace fund instead. 20 years average for gas furnaces. Your high efficiency furnace may no longer be considered high efficiency dxue to improvements in technology. I never saw a furnace that was called Low Efficiency.
Stretch
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You'd be amazed what people will pay when it's cold. A couple folks I used to know paid about 200 for a hot surface igniter one cold night. House was about 45F, and they couldn't find someone who took checks.
I've also never seen a furnace called "low efficiency".
--

Christopher A. Young
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Let's not take things too literally. Sure, furnaces are not marketed as "low efficiency", but certainly there are many furnaces out there that operate at lower efficiency levels than a modern (marketed as) "high efficiency" unit, and thus for general and basic comparative discussion can be termed "low efficiency". So to not offend anyone, how might one refer to anything other than a modern "high efficiency" unit?
Dave

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The serviceman explained that it is not just a motor, but an intergral blower and motor with stainless steel inners due to the corrosiveness of the flue gases.
Dave
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The age is not the issue but the advancements in technology may help lower operation costs. I do not think most of the concepts of a furnace have changed too much but how efficently and smoothly it runs has changed, even in 12 years.
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FWIW As an ex printing equipment mechanic who prides himself in being able to fix most things I hate buying service contracts. However that being said I'm have been finding myself buying more of them than I like to admit. The reason is that most new appliances just are not made as good as they used to be. CBC radio in Ontario has a monthly appliance repair question and answer call in show and the technician is a real straight shooter who tell most people to repair their older appliances because the replacements available are usually junk no matter how much you spend.
As far as furnace contracts are concerned there is another glitch that makes them a necessity and a rip off at the same time. Furnaces don't break down in the summer they usually pack it in on the coldest day of the year and service companies only look after their contract customers and non contract break downs don't stand a chance of getting done till the rush is over. Even contract customers can legal be forced to wait up to 48 hours as per the condition of their contract. I have a business permit and all my tax numbers and I can't purchase parts from my local heating and plumbing store because I'm not A licenced heating contractor. When my mothers furnace broke down just after the warantee ran out it cost me just under $250.00 to replace the igniter unit and that took less than 15 minutes. Part was $60.00 and labour etc. made up the balance of the bill. Vent fan blew a couple of months later and they wanted $600.00 plus labour to replace it luckily a friend of my son is now a licenced gas fitter and he got the part for under $200.00 and installed it N/C. Since all this happened I purchased contracts on my boiler and my mothers furnace and in the last 7 years we have had 6 igniters and one circulating pump replace and the total of all those calls comes to $2500.00. Cost of the 2 contracts less than $1400.00.
I don't like being screwed any more than anyone else but these bastards seem to have us all by the short hairs but in my case I seem to be ahead of the game as far as furnace contracts go. My sons friend says the new furnaces, water heaters etc. are real junk and if he wasn't in the business he would certainly purcase a contract
Sorry for the rant
Jimbo Jimbo

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You rant as much as you wish. YOu're one of few folks who really makes sense.
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Christopher A. Young
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