If your plant uses oil-injected rotary screw air compressors, then you’ve undoubtedly heard the pitch from your compressor salesman about their “Extended Warranty”. Heavily promoted by all major compressor manufacturers, these “warrantees” are often sold as “free” insurance policies that extend your compressor’s warranty another 5-10 years beyond the manufacturer’s original 1-2 year warranty.

Sounds great, right? “Free” extended warrantees, what’s not to like? Well, like most things in life the devil is in the details, and in the case of compressor manufacturers extended “warrantees”, there’s plenty of devils lurking in the fine print. Here are five good reasons to pass on compressor extended warrantees.

1) Compressor Extended Warrantees are “Limited” and “Conditional”
If you’ve ever bothered to read both your air compressor’s warranty statement and maintenance manual, the first thing you’ll notice is that these warrantees are “limited” and highly “conditional”. This means that not everything is covered under the warranty, and the components that are, are subject to a multitude of disqualifying conditions. Among the most common conditions used by the manufacturers to void their warrantees are the strict requirements that you MUST:

  •  Only use OEM branded oils and parts (sold at very high premiums)
  • Strictly follow their obsolete time-based oil and parts replacement (as detailed in their manuals)
  • Take regular oil samples at their specified frequency and submit them to their lab only
  • Maintain maintenance and purchasing records to prove you have satisfied all conditions

In other words, you must perform your compressor’s maintenance exactly how and when the manufacturer dictates, or your warranty is void. You can’t utilize any of today’s reliability-centered maintenance technologies. You can’t save money by competitively shopping your compressors’ oil and parts from other suppliers. You can’t replace your oil and filters only when needed based on their actual condition. Instead, you must replace them at the manufacturer’s prescribed interval – whether needed or not.

2) Compressor Extended Warrantees are Hard to Collect

Given all the conditions tied to these extended warrantees, it should come as no surprise that warranty claim acceptance rates are extremely low. When you consider all the required maintenance tasks detailed in their manuals, there are just too many potential “gotchas” that the warranty departments can use to deny your claim. For instance, just one missed oil sample can mean the difference between getting a $30,000 air-end replaced under warranty, or not. If you’ve ever had experience trying to collect on a warranty claim from your compressor manufacturer, then you know just how difficult a process that can be. One common reason for this is that the manufacturers’ warranty departments are very closely monitored, and reimbursements are scrutinized against their annual budgets. If warranty reimbursements get too high, management takes notice and warranty claims quickly become harder to get approved.

3) Compressor Extended Warrantees are Anything but “Free”

Extended warrantees are often promoted as “free” insurance policies with no upfront cost, but they are anything but “free”. Extended warrantees are extremely profitable for the manufacturers, and by extension, are extremely expensive for their customers. Air compressor manufacturers generate the vast majority of their profits from repeat sales of high-priced, OEM branded oil and parts. Their oil and parts (produced by others) have extreme mark-ups that are often 40% – 50% higher than equivalent aftermarket parts that are sold without the OEM logos. And the engine that drives repeat oil and parts sales (user consumption) is the time-based “preventative maintenance” outlined in their manuals. For more than 50 years, the compressor manufacturers’ two-prong strategy of high oil and parts prices coupled with mandated consumption has proven to be a winning formula for maximizing their sales and profits at their customers expense.

4) The Odds are Stacked Against You

With extended warrantees being so lucrative for the manufacturers, it’s no surprise that they’ve become the centerpiece of their marketing strategy. But what’s in it for compressor users, and what are the odds they will realize any benefit from an extended warranty?

To answer this, it’s helpful to know what the compressor OEMs already know. Air compressors, like most rotating equipment, generally follow the “Bathtub” Reliability Curve. Failure rates are highest early in the compressor’s life during the initial break-in period, when the “original” factory warranty still applies. After this initial break-in period, failure rates drop dramatically and remain extremely low for many years to come, during the time an extended warranty might apply. With decades of warranty claims and failure data at their fingertips, compressor manufacturers have performed their own risk-benefit analysis and they know, with absolute certainty, that the odds are stacked heavily in their favor, and gainst their customers.

5) Conditional Extended Warrantees are Illegal in Other Industries

If you’re beginning to have doubts about your compressor manufacturer’s extended warrantees, you have many good reasons. But did you also know that this practice of conditioning warrantees on the use of OEM oil and parts is illegal, prohibited by U.S. federal law, for “consumer products” like cars and trucks? The Magnuson-Moss Warranty Act was enacted in 1975 to help protect consumers from deceptive warranty practices similar to those used in the compressor industry. Magnuson-Moss makes it illegal for manufacturers of consumer product to condition their warrantees on the use of OEM branded parts. For instance, a car manufacturer cannot void their engine warranty solely because you used a different brand of oil. Yet this questionable practice, while deemed illegal in the U.S. for auto manufacturers, is a commonplace excuse to void your warrantee by compressor manufacturers.The same protections provided by Magnuson-Moss are long overdue in the air compressor industry. Such a law would not only help protect air compressor users against deceptive warranty practices, but they would also promote increased competition in the marketplace that would benefit them with lower prices. In the same way that auto parts stores and independent auto repair shops proliferated after Magnuson-Moss to increase competition and drive down the cost of vehicle maintenance, compressor users would see the same explosion of options and money-saving benefits.

The Bottom Line

So, what does this all mean for the rotary screw air compressor user? Bottom line, extended warrantees are a component of a carefully crafted marketing strategy that is designed and created by the compressor manufacturers for their benefit – not yours. As a result, extended warrantees are very expensive, difficult to collect, and the probability that you’ll ever need or financially benefit from one, is statistically extremely low – and the manufacturers know it.

Given this, compressor users would be better off declining these warrantees, expanding their supplier options, and investing their savings in some of the more advanced proactive and, reliability-centered maintenance practices not currently offered by the compressor manufacturers.

If you are ready to discuss a superior alternative to compressor extended warrantees, we’re here to help. We will show you how our state-of-the-art, proactive and reliability-centered advanced compressor oils, compressor oil purifier system, and oil conditioning technologies will enable you to do more with less. By targeting the root causes responsible for most compressor maintenance and repairs, we help users IMPROVE COMPRESSOR RELIABILITY while SAVING TIME, MONEY & THE ENVIRONMENT. Give us a call today to learn how much easier and better compressor oil maintenance can be.