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What are Maintenance Contracts?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 17 September 2016
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    Conjecture Corporation
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Maintenance contracts are agreements that define the range of support services provided after the purchase of a major appliance, vehicle, property, and other high ticket item. While similar to a service contract, the support offered in this type of contract is normally geared toward preventing major problems from developing with the item, rather than simply covering the cost of repairs when there is some type of breakdown. Contracts for maintenance are usually offered for an additional fee, and may be considered an add-on to a service contract.

One of the most common examples of maintenance contracts is the additional protection offered as part of many vehicle purchases. While the benefits included in an auto maintenance contract will vary from one dealer to another, most will include features like replacing the battery, rotating tires, and regular inspection of the transmission, engine, and exhaust system. The focus is on keeping the automobile in good working order. This helps the owner to avoid the greater expense that is incurred when some sort of major problem with one of the vehicle’s operational systems occurs.

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Building maintenance contracts are another common application of this type of agreement. In this scenario, the service provider agrees to oversee certain functions that will help to keep the building and its systems up to code and in good working order. A typical contract for a commercial building would include periodic inspections of the foundation, regular maintenance of the plumbing and electrical systems, and seasonal inspection of the heating and cooling system.

With just about all maintenance contracts, there are limits on what the agreement covers. Often, necessary repairs or replacements conducted as part of the maintenance are offered at no charge, up to a certain amount. Providers may charge a discounted fee for any work done above the maximum amount allowed by the terms of the contract, or the costs may revert to standard pricing. For this reason, it is important to read the contract closely, and make sure there is a clear understanding of what is covered, and for what amount.

It is not unusual for maintenance contracts to be offered as a means of obtaining services that are not included in the basic service contract. Savvy consumers should look closely at what is provided within the terms of the contract, compare the contract premium with what would be paid out of pocket for those same services, and determine if the contract is truly cost-efficient. Depending on the type of maintenance offered, the contract may provide little to no real benefit to the consumer in the long run.

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