A service contract is a promise about a unit that already exists. When it is signed, the seller and the contract are looking at the unit as it stands that day. Many contracts treat a fault that was already present at enrollment differently from a fault that starts later. The line between the two is the prior failure line, and it decides more of the first claim than most readers expect.
What the line means
A prior failure is a breakdown, a symptom, or a known defect that existed before the contract began. Contracts use different words for this. Some say pre-existing condition, some say a unit that was not in working order at enrollment, and some tie the term to an inspection or start-up record. Read the definitions section for the exact term, then find where the contract uses it in the coverage and exclusion parts. The word alone does not tell you the rule. The rule is in the sentence that says what happens to the fault.
What to check in the paper
Look for three things. First, whether the contract requires a condition check at sign-up, and who performs it. Second, whether a unit that fails that check can still enroll, can be enrolled with the fault excluded, or is refused. Third, whether a waiting period applies to the whole contract or only to certain parts, and whether a fault that appears inside that period is treated as new or as prior. Mark each of the three in the contract with a note in your own words.
What to ask before you sign
Ask the seller or the administrator these questions, and get the answers in writing. Does the sign-up check test the unit, or only look at it? Who writes the result down, and can you have a copy? If the check finds a fault, is the unit refused, enrolled with that fault excluded, or enrolled after a repair? Does the contract count a fault you already noticed but did not report at sign-up as a prior failure? If a fault appears inside the waiting period, what proof does the contract ask for to show it started after enrollment?
Keep your own record
Before the contract starts, write down how the unit ran. Note the sounds, the temperatures, the cycle times, and any warning lights, with the day you observed each one. Keep the sign-up check result, the quote, and the signed page together. If a fault appears later, the record of how the unit ran before enrollment is what lets you show when a symptom began. The contract's paper is the rule. Your record is the evidence that the rule was applied to the right facts.
Where the state rules sit
The rules on sign-up checks, waiting periods, and what a contract may exclude vary by state. This guide does not describe any one state's rules and has not checked them against any particular contract. For the rules and the published roster in your state, use the state page on this site. Where that page says a point is not read in this edition, treat that point as open and ask the administrator directly. Ask which regulator oversees the contract, and check whether that regulator publishes a roster you can search.