Service plans for heating engineers: how monthly cover actually works

A service plan is a monthly payment from a customer in return for things you have agreed to do. Usually that is an annual boiler service, a set number of call-outs, labour included, and money off parts. Written well it turns a boiler you see once a year into income that arrives whether the phone rings or not.

Written carelessly it turns you into an unauthorised insurer. The gap between the two is narrower than most owners expect, and it comes down to how you word what the customer gets. This guide covers what a plan is, how to price one, what the law expects of you, and the thing that empties a plan book without anyone noticing.

A plan book is worth more than the work inside it

Recurring income changes what your business is. Instead of starting each month at zero and hoping the weather turns, you start it with a known figure already committed.

It also changes what the business is worth. Anyone valuing a heating firm looks hard at the plan book, and the first question is how many plan customers are still paying twelve months after they joined. The figure buyers tend to want is 85% or better. Below that, the book is a leaky bucket and gets valued like one.

There is a quieter benefit that owners notice before any of that. A customer on a plan rings you first. They are not getting three quotes when the pressure drops, because they have already paid for the answer.

Promise things you will do, never a sum of money

This is the part that catches people out.

The FCA’s perimeter guidance treats periodic maintenance as sitting outside the regulated world (PERG 6.6.4G). Servicing a boiler once a year and turning out when it breaks is work, and selling work is not insurance. But the same guidance says a contract carrying any identifiable insurance obligation is a contract of insurance in its entirety (PERG 6.6.7G).

In practice that means one line can convert a whole plan.

“Repairs covered up to £1,500 a year” is a promise to pay out against an uncertain event. That is insurance, the whole plan becomes an insurance contract, and selling it without authorisation is a problem. “An annual service, up to four call-outs, labour included, 15% off parts” is a list of things you will do. That is maintenance.

Write every entitlement as an action, and the plan stays on the right side of the line. A useful test before you publish: read each item and ask whether it describes something a person turns up and does, or an amount of money that changes hands when something goes wrong. If any of them is the second sort, rewrite it.

None of this is legal advice, and if your plan is doing anything unusual it is worth an hour of someone’s time who does this for a living. But most plans do not need that hour. They need the wording to describe labour rather than pounds.

Rolling monthly, or a fixed term paid up front

The second trap is subtler and it hides in something that sounds harmless.

“£120 a year, and you can pay it at £10 a month” is not a monthly plan. It is an annual price you have agreed to accept in instalments, which is deferred payment for a defined supply. That is consumer credit, with its own rules and its own authorisation.

A rolling monthly plan is different. There is no annual total the customer owes. They pay for this month, and if they stop paying, cover stops. Nothing has been lent to anybody.

So pick one and be clear about which you have picked. Either the plan rolls month to month at a monthly price, or it is a fixed term paid in full at the start. Setting an annual figure and splitting it into twelve is the version to avoid.

What people actually pay

Most firms run three or four tiers. The shape is fairly consistent across the country, even where the prices are not.

An entry tier covering the boiler only, usually somewhere around £10 to £15 a month
A middle tier adding controls, the cylinder and the system, often £15 to £25
A top tier taking in the full system including radiators and pipework
A landlord tier, priced higher because the annual gas safety check and the certificate are built in

What separates the tiers matters more than the prices. The levers worth using are whether the annual service is included, how many call-outs a year they get, whether labour is free or discounted, what the parts discount is, and how quickly you promise to attend. Response time is the one most owners forget to charge for, and it is the one customers care about most in January.

Price the bottom tier so it is an easy yes and the top tier so it is worth selling. If nobody ever buys your top tier, the middle one is priced too close to it.

The fourteen days you have to give them

Almost every plan you sell is signed at a kitchen table or over a link, which makes it a distance or off-premises contract under the Consumer Contracts Regulations. The customer gets fourteen days to cancel and get their money back.

One detail decides how that plays out. If the customer wants cover to start straight away rather than in a fortnight, they have to ask for that expressly, and you need it recorded. Do that, and if they cancel inside the fourteen days you can charge for the days of cover you actually gave them. Skip it, and you refund in full even if you serviced the boiler on day three.

That is one tick box and one line of stored text. It is also the difference between a fair outcome and an argument you will lose.

Waiting periods keep the plan honest

A plan sold with no waiting period attracts exactly the customer you do not want: the one whose boiler is already making a noise.

Two things fix that without being unfair. A short initial waiting period before call-outs become available, commonly thirty days, stops the plan being used as an emergency call-out with a discount. Excluding faults that already existed when they joined does the same job from the other direction. For older appliances, an entry inspection before cover starts is reasonable, and it doubles as a chance to sell the replacement.

Say all of it plainly on the plan itself. A customer who reads the exclusion in month one is a customer who does not complain in month four.

Failed payments empty a plan book faster than cancellations

Of the customers who left your plan last year, some chose to go and some simply stopped paying. Most owners have never seen that split.

The second group is almost always the larger one, and it is the group you can win back. Somebody changed banks, or a card expired behind a standing order. Money was tight in January, the payment bounced, and nobody told them.

What happens next decides whether you keep them. The instinct is to cancel their cover the day the payment fails, and it is the wrong instinct on both counts. Commercially you have just thrown away a customer who wanted to stay over an administrative accident. And a homeowner whose boiler dies the week their payment bounced, who then discovers they were not covered, is a complaint that can go to the Ombudsman. The cost of that dwarfs the payment you were chasing.

Give it time. Keep cover running while you chase, tell the customer clearly and early that a payment has failed, and only stop cover once it is genuinely clear they have gone. Six weeks of patience recovers a lot of customers who never intended to leave.

One thing worth knowing about retries: only retry a payment that failed for want of funds. If a customer has cancelled the mandate at their bank, or the account is closed, retrying is a fee for a guaranteed failure. On a payer who has died, it is worse than that. Retry the ones where the money might turn up, and handle the rest with a phone call.

Getting the book out of the spreadsheet

Most firms run their plans on a spreadsheet, and the spreadsheet does its job until it does not. It will tell you who is on a plan. It will not tell you how many call-outs Mrs Halliwell has left this year, or which four payments failed last month, or what the book is worth, which is the number a buyer asks for first.

That is the gap monthly service plans in Mucka are built to close: the plans you sell, the customers on them, each allowance counting down through the year, and the retention and income figures underneath. Customers agree to their cover and set up a Direct Debit on their own page, Mucka collects the monthly payment, and when one fails the cover keeps running while it gets chased.

Where to start

If you have no plans at all, start with one tier and your existing annual service customers. They already pay you once a year and already trust you. Turning that into a monthly payment is a short conversation, not a sales pitch.

If you already have a book, spend an hour on the wording. Check every entitlement describes work rather than money, check you are rolling monthly rather than selling an annual price in instalments, and check you are recording the express request to start cover early. Then go and look at who stopped paying last year and ring them.

Frequently asked questions

What is a service plan for a heating engineer?

A monthly payment from a customer in return for agreed work: typically an annual boiler service, a number of call-outs, labour included and a discount on parts. Cover sits on the appliance at an address rather than on the person, so it stays with the property if the customer moves.

Do I need FCA authorisation to sell a boiler cover plan?

Not if the plan promises work rather than money. Periodic maintenance sits outside the regulated perimeter. The moment a plan promises to pay out a sum against an uncertain event, such as repairs up to a set value, it becomes a contract of insurance in its entirety and needs authorisation. Wording every entitlement as an action is what keeps a plan outside that.

How much should I charge for a service plan?

Entry tiers covering the boiler alone commonly sit around £10 to £15 a month, with system and landlord tiers running higher. What matters more than the price is what separates your tiers: the annual service, the number of call-outs, whether labour is included, the parts discount and how quickly you attend.

Can I offer an annual plan paid monthly?

Not as instalments on an annual price. That is deferred payment for a defined supply and it takes you into consumer credit. Offer a rolling monthly plan with no annual total owed, or a fixed term paid up front, and stay clear of the version in between.

What should I do when a plan payment fails?

Chase it before you cancel anything. Most failed payments are accidents rather than decisions, and cancelling cover the same day loses a customer who wanted to stay and creates a complaint if their boiler then breaks. Keep cover running while you chase, tell them early, and only retry payments that failed for want of funds.

Running plans on a spreadsheet works right up until you need to know what the book is worth. Mucka handles the plans, the customers on them, the allowances and the monthly Direct Debit, and it keeps chasing a failed payment instead of dropping the customer. Have a look at Mucka and see what your plan book is actually doing.