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Construction Equipment is the Backbone of Your Business │Why You Should Get Extended Warranty Coverage

Construction Equipment is the Backbone of Your Business

Why You Should Get Extended Warranty Coverage

Construction equipment is the backbone of your business. And it only pays you back when it’s working. Whether your equipment is brand new or used, you should seriously consider extended warranty coverage. Here’s why.

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The original equipment warranty doesn’t last as long as the machine.

Initial coverage is provided by the manufacturer, though the insurance is administered through your dealership. Coverage is usually one year, or based on some number of hours, and there may be other limitations. Some OEMs offer longer warranties, but it’s still highly likely you’ll be using the machine after that time period ends. Since coverage belongs to the machine, if you sell it or move it to some other location, it’s still covered, though the dealer assigned to it may change.

BrokenMachine_ADIBlog09122013Although original equipment warranties can vary to some degree, typically they cover one year of what’s known as “material defects and workmanship” and normal use — in effect, things that fail or break where the manufacturer is at fault. If you mistreat your machine or it’s damaged in an accident or some natural disaster, it’s not covered.

Every warranty is somewhat different in terms of what’s covered, especially consumables such as filters and lubricants. You may get a free replacement machine to use while yours is being repaired, but often that’s not the case. And if repairs are handled at the jobsite instead of in the shop, you may be liable for the tech’s mileage and travel time.

Extended warranty coverage varies, too.

add-on-extended-warrantyOnce the original warranty has expired, your OEM is out of the picture. Extended warranties are sold by your dealership, and they’re underwritten by a third party, not the manufacturer.

The specified time frame or number of hours can differ, and you have a choice of what’s included in the coverage. For instance, here at ADI we offer three options for construction equipment that cover just the powertrain, the powertrain and the hydraulics or the entire machine.

You should consider your coverage options on a case-by-case basis, because you don’t use every machine the same amount or in the same ways. Think about these factors:

  • Are you set up to handle off-site repairs, with spare parts or even machines, a shop and fully-skilled techs? Often remote operations such as aggregate, pipeline or mining jobs have to fend for themselves, whereas municipalities and general contractors tend to rely on their dealerships.
  • Do your people have the tools and training to deal with high-tech electronics now standard in new equipment?
  • What will you do when your government-mandated emissions system warranty – five years or 3000 hours – expires? New powertrains that incorporate Tier 4i or 4-Final are more complicated than ever, too.
  • Are you prepared to keep working if the machine breaks down? Delay is expensive, so that’s part of the financial equation. The bigger and more critical the equipment, the bigger and more critical the downtime factor becomes. Extended coverage that assures you a free loaner could save your job and your profit margin.

Protect My Iron® | ADI AgencyAs your machines age, they’re going to need more work, and that can get expensive. Unless you’re capable of handling every eventuality internally, in a timely manner, extended warranty coverage is going to make more sense.

Premiums for extended coverage can seem costly, too, but that reflects the obvious fact that the risk is greater. Your job is to compare the costs. Start by checking the extended warranty limits, because they differ, then compare that to your operations and expected usage to see which is lower. A machine that’s productive longer lowers your total cost of ownership and increases your return on investment, and that’s the real bottom line.

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