Scroll Top
6060 Butternut Drive, East Syracuse, NY 13057

Choosing Which Extended Service Contracts Are Right For You | Construction Equipment Warranties Explained

Choosing Which Extended Service Contracts Are Right For You Construction Equipment Warranties Explained

Choosing Which Extended Service Contracts Are Right For You | Construction Equipment Warranties Explained

Things go wrong, even when construction equipment is well-cared-for and always operated within spec. The only thing predictable about machine repairs is that they will be expensive. And supremely untimely. Extended service contracts seamlessly continue protection for an existing machine that will soon age out of its original equipment warranty, and they protect newly-purchased used equipment.

Extended warranties cover real-life situations. 

broken down machine frustrationA used excavator recently purchased from your construction equipment dealership breaks down on the customer’s job site. Their project is delayed, costing them precious work time as well as frustration and hassle while you scramble to deliver a rental machine to get them back up and running with least downtime. Hopefully you have a rental available. And hopefully your customer has funds set aside to get his excavator back on the job as quickly as possible.

Encouraging your used equipment customers to outfit machines with extended service contracts protects them in instances like this. Instead of having to set aside large sums of money to create a repair fund, they simply pay a monthly premium. Cash for repairs is always there if it’s needed, yet your customer’s outlay is significantly reduced and they can conserve their capital to use for more profitable business-building purposes.

Your dealership needs similar protection. Any time a piece of rental equipment is out of service, it’s unavailable to earn revenue. Extended service contracts that cover your rental fleet ensures you always have resources to effect repairs right away and get machines back into service, reducing your exposure to this type of income loss.

For you and your customers, the key is choosing the right extended service contract.

PMI-types of coverage_ebook-01-01Typically, used construction equipment warranties offer three levels of coverage:

The greater the coverage, the higher the premium, of course. So choosing the most valuable, cost-effective options depends on how often you use this particular piece of equipment and under what conditions. The more the machine works, or the more difficult the conditions, the more likely something will break or wear out before its time.

You should weigh both costs and benefits, because choosing inadequate extended coverage won’t provide the protection you need.

  • A powertrain warranty goes right to the machine’s heart, typically covering the engine, power transmission and drive systems, plus vibratory components, swing gear assembly and electrical system. You need at least this much coverage.
  • A powertrain + hydraulics warranty adds coverage for hydraulic systems that are operationally critical for many types of construction equipment. For those machines, a powertrain-only warranty will leave you in the lurch if it’s a hydraulics problem that causes your equipment to break down.
  • Full machine coverage includes powertrain and hydraulics plus numerous parts needed due to other types of mechanical breakdown — steering, brakes, air conditioning, etc. Considering that a powertrain + hydraulics warranty usually covers 90-95% of what you get with full coverage, this could be overkill. On the other hand, for the equipment you use most often or under especially tough conditions, full coverage may well be your most cost-effective option.

coverage_checklistKnow what you’re getting.

Read the terms and conditions to know exactly what is included and what is not. Typically, costs for things like onsite work and equipment transportation are not covered, but often you can add coverage to pay for these things. Note that, like OEM warranties, every extended warranty covers your machine for a specific number of service hours and/or time period. That’s why it’s so important to factor in frequency of usage when evaluating coverage options.

Knowing how to choose will help you make better informed decisions about extended service contracts for your rental fleet, and it will make you a more valuable working partner for customers, as you help them make the best coverage decisions regarding their construction equipment, too.


Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.