Carson City, NV June 18, 2021
As we approach the summertime and
with temperatures rising, many Nevadans may be in the market for appliances
like an air conditioning (AC) unit. AC units are expensive products, so it is
not uncommon for consumers to consider purchasing a service contract, also
known as an extended warranty, service agreement, or maintenance agreement, to
cover the financial risk if the product fails and needs to be repaired or
replaced. Before consumers buy a service contract for any big-ticket items,
whether it be an AC unit, a refrigerator, or a car, consumers should be aware
of some important facts.
Understand what you are buying
Service contracts ARE NOT
insurance! Service contracts are a prolonged warranty offered by a warranty
administrator, a retailer, or a manufacturer. Service contracts are usually
offered by a vendor at the point of sale of a product.
Read the fine print
It is important to read and
understand the terms and conditions included in a service contract because many
contracts have exclusions and/or requirements. Some common exclusions
revolve around the age and maintenance of the appliance. For example, you may
be required to have your AC unit or furnace serviced annually and have proof of
maintenance, otherwise, if you have a claim, it can be denied. If the appliance
you are buying already comes with an extended warranty, often a service
contract will not cover the item.
Some service contract offerings
do not provide a copy of the contract to read at the time of sale unless you
purchase the contract. Fortunately, there is a “free-look” period - typically
20 days - to read the contact and decide if you wish to keep it or not. If
after reading the fine print you decide you don’t want to keep the contract,
cancel before the “free-look” period is over because there may be cancellation
and transfer fees. Be sure to follow the cancellation procedure set forth in
the contract.
Pro Tip: If you don’t want
to pay for the contract before you read it, check out the Division’s website
for the “Service Contracts Look-up Tool” which contains a listing of licensed
Service Contract Providers and each service contract that is approved for use
in the State of Nevada. To view this tool visit: https://doi.nv.gov/Consumers/Service-Contracts/.
Verify if a Service
Contract Provider is licensed
Even though service contracts
are not insurance, the Division is still charged with licensing service
contract providers. There are many service contracts companies selling numerous
contracts which is why it is important to verify that the companies are
licensed to do business in Nevada. To verify if a company is licensed you can
visit the Division’s website at https://di.nv.gov/ins/f?p=licensing:search
and click on “Company Lookup.” Note: warranties offered by the manufacturer and
service contracts for items of less than $250 are not required to be licensed.
If you are offered a service
contract or have purchased a service contract underwritten by a company that is
not listed on the Division’s website, please notify the Division at pcinsinfo@doi.nv.gov.
About the Nevada Division of
Insurance
The State of Nevada Division of
Insurance, a Division of the Nevada Department of Business and Industry,
protects the rights of Nevada consumers and regulates Nevada’s $18 billion
insurance industry. The Division of Insurance has offices in Carson City and
Las Vegas. In 2020, the Division investigated more than 2,300 consumer
complaints, answered over 10,000 inquiries, and recovered over $4.5 million on
behalf of consumers. For more information about the Division of Insurance,
visit DOI.NV.GOV.
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