“What If Something Goes Wrong?” A Guide To Service Contracts

Dishwasher sprung a leak? Diamond ring losing that special sparkle? TV on the fritz? Lawnmower stopped lawn-mowing?

When a big-ticket item like a major appliance, jewelry, or garden equipment breaks, you may have a service contract or extended warranty contract to bail you out of trouble. These contracts cover your purchased items and can provide added value or peace of mind.

A blank service contract surrounded by hand toolsBut who can you turn to if you have a disagreement with the service contract provider?

The Bureau of Household Goods and Services (BHGS) has jurisdiction over the sale and administration of service contracts, which are also referred to as maintenance agreements or extended warranties. Similar to an insurance policy, a service contract provides you with peace of mind that, in the event something goes wrong with your product, it can be repaired at no or low cost.

For starters, it’s important that you read and understand the terms and conditions of the contract; for example, the basics of what is or is not covered, when the contract starts and stops, the limitations of liability, and your responsibilities as a contract holder.

According BHGS, most service contracts fall into one of six basic types:

  • Date of Purchase Plans – these plans begin on the date the customer purchases the product and its extended warranty.
  • Extension Plans – extension plans extend the manufacturer’s warranty for a specified period, usually 90 days to up to one year.
  • Major Component Programs – also known as “primary protection plans,” these programs insure only the product’s major component, such as the picture tube in a television, and generally do not include labor costs.
  • Comprehensive Programs – comprehensive programs or plans cover all parts and labor for a specified period of time, such as one, three or five years.
  • Replacement Programs – oriented toward products selling for under $100 retail, replacement programs guarantee product replacement if the item should fail during the term of the plan.
  • Deductible Programs – under deductible programs, the consumer is responsible for a certain amount of money, such as the first $50 in repairs. Once repairs exceed that amount, the coverage becomes effective.

Currently, California law specifically spells out the definition of a service contract as a contract in writing to perform, over a fixed period of time or for a specified duration, services relating to the maintenance, replacement, or repair of many household items. The law also includes a laundry list of items covered under the law: furniture, jewelry, eyeglasses, lawn and garden equipment, and so on.

AB 1483, signed into law by Governor Jerry Brown in September of 2018, is simplifying the language, defining the term “service contract” to apply more generally to almost all consumer goods (with the exception of clothing and consumable items), meaning any product, new or used, that is used, bought, or leased for use primarily for personal, family, or household purposes. This expansion of the law also includes assistive devices, and goes into effect in January 2020.

If you have a problem with a service contract you bought, first try to resolve it with the contract seller or administrator, or the company performing the repairs. If you cannot resolve the problem, contact the Bureau of Household Goods and Services for assistance.

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