When a covered appliance cannot be fixed, the next question is often the work around it: disconnecting the old unit, setting the new one, reconnecting gas, water, or a drain line, and hauling the old unit away. Some of that work is simple enough for a capable owner. Some needs a licensed trade. Whether a service contract pays for any of it depends on the wording, so the decision starts with reading the page, not with booking the first installer you find.
Split the job into three parts
Treat a replacement as three separate tasks: removal of the old unit, the new unit itself, and the hookup that makes it run. A service contract is written to pay for breakdowns of the items it lists. Many contracts say little about removal and installation, and some state directly that they do not pay for them. Search the exclusions for words such as installation, removal, hookup, modification, code upgrade, and permit. Those words tell you who owes the bill for each part.
Know what a licensed hookup involves
Gas connections, electrical circuits, and water lines are often governed by local rules that say who may do the work and whether a permit or inspection is required. A replacement can also trigger work the old unit never needed, such as a new shutoff valve, a longer drain run, or a dedicated circuit. Ask the plan in writing which of those items it excludes before you accept a replacement offer. Ask your local building office what the rules are for the work you would hire out.
Questions to ask before you hire
Ask the installer for a written quote that lists each task on its own line: removal, the unit, the hookup, any permit, and any disposal charge. Ask how long their own workmanship warranty runs and who to call if the new unit leaks or stops in the early days after they leave. Ask who pulls the permit and who signs the inspection. Ask whether the plan must approve their invoice before work starts. Keep copies of every answer.
When doing it yourself makes sense
A simple swap can be a reasonable job when the connections already exist, the unit is manageable, and the manufacturer's instructions are clear. Even then, read the contract's wording on owner-installed replacements. Some plans ask for proof of a professional install before they will consider a later claim on that unit, and a self-installed unit can leave you with no one to answer for a slow leak. Photograph every connection, and keep the packing slip and the model number with your contract.
What to compare
Compare three things side by side: the quote for each task, the workmanship terms the installer offers, and the exclusions in the contract. Four terms come up here. A service call fee is the charge a contract may bring each time a technician visits. An annual cap is the most the plan will pay in a contract year. A waiting period is the time between signing up and the start of claim coverage. An obligor is the company legally responsible for paying the contract's claims. Read the sample contract page on this site, linked here, to see how these terms are written before you buy, and check the published tables on the front page for the figures each company has published.