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The Hidden Costs of OEM Warranties: Why They Aren’t as Cost-Effective as You Think

With technology advancing in so many fields, it’s very tempting to buy into Manufacturer’s warranty plans and in certain cases it makes absolute sense.  For others it’s an endless stream of spending leaving you asking why!

Companies that have their operations occurring outside in the environment don’t benefit from manufacturer’s warranty plans and end up spending more on new equipment than intended.  OEM warranties often include fine print outlining what is and isn’t covered. If a claim falls outside the scope of coverage or violates specific terms and conditions, it may be denied. The reason why is that manufacturer’s warranty plans only cover manufacturer defects, not naturally occurring damage and failures.

Common failures for equipment in an outside environment such as physical, corrosion, and power surge damage, leads to warranties being denied and worse the equipment being deemed Beyond Economical Repair.  This leaves manufactures in a position to void a large portion of the warranty equipment and once it’s denied one time the warranty no longer applies to that denied equipment.

Equipment that is installed outside in the environment is exposed too many naturally occurring events that cause non-covered failures.  It’s estimated that manufacturers of such equipment typically deny the warranty of at least 75% of the equipment sent in for OEM warranty.  Of that 75% of equipment, 60% is declared as being BER.  A BER piece of equipment leaves you in a position to have to seek replacement.  That means a new sale for the OEM!

There is a cheaper alternative though.  Partnering with a 3rd party qualified vendor that does not have a partnership with the OEM, such as Commercial Electronics, Inc. will cut your new equipment costs. You will discover that 98% of the OEM partnership BERs were in fact repairable, saving you hefty replacement costs.

Smart leaders know that the primary goal for a company is to make money and saving the company money through quality repairs is the smart way to do it!