Ok, the honest/short answer is – No. They aren’t needed, but they are highly recommended and here are some reasons why a service contract can benefit a homeowner.
Service contracts can make you an established, recurring customer which is likely to increase your priority to the company you are working with; this can mean scheduling priority, lower fees, “free visits”, and more depending on the company.
These contracts are usually a one year contract, they can be recurring or not. I’ve seen contracts be 3+ years in length. Benefits to longer contracts are mainly that you are locking into today’s rates and won’t have rate increases for future visits until your contract is up*.
Having a service contract in-place for your equipment is beneficial just in the fact that you will be getting eyes on your system even if there is nothing wrong. This allows your technician to check things out and possibly identify issues that are coming, allowing you to be proactive and be ready; rather than having issues arise sporadically that can back you into a corner. There are two main kinds of contracts: Residential and Commercial.
A residential contract should include at least two visits a year – possibly more depending on your system needs. It should cover your main equipment (i.e. furnace, air conditioner, boiler) and possibly add-on equipment (i.e. humidifier, air purifier).
A commercial contract should include at least four visits a year (quarterly) – the number, again, can be adjusted to fit needs. It should cover equipment you want covered (i.e. RTUs, MAUs, AHU, furnaces, boilers) and exclude what you don’t want covered – which in some cases could be because you have another contract in place for some things (new installs, etc).
Of course everything comes with a price. The more equipment you have covered under a service agreement, the more it will cost just because it takes more time. However, many companies offer discounts to go with the contract, thereby saving money during the contract term on repairs or labor or both.
Again, service contracts are not NEEDED, but they can be a HUGE benefit to the customer. Why? Basically, regular maintenance helps extend the life of your equipment. I’ve worked on furnaces that are less than 10 years old that need to be replaced because nothing has been maintained and the equipment had catastrophic issues making it not cost effective to repair. I’ve worked on boilers that are from the late 1800s still doing great because of regular maintenance. Maintenance is key to saving money and helping your equipment last. The easy way to get maintenance done is via a service contract.
* Make sure to read your contract prior to signing as every company will have there own terms & conditions.