The Assurant Solutions Extended Warranty Market Report* questioned consumers that had purchased an extended warranty product in the past year, and found a significant increase in those not being able to rely on personal savings to replace an appliance if it broke down. One in five (20 percent) stated lack of funds as a reason to buy an extended service contract, compared to just one in ten (11 percent) the year before. According to research conducted by Consensus Research last year, almost a quarter of UK consumers (22%) now own one or more extended warranty policies.
In a similar vein, almost two thirds (63 percent) of those surveyed said they purchased an extended warranty for their own peace of mind because of their concerns about their purchases breaking down. This represents a significant increase (10 percentage points) from the research conducted in 2011 when just over half of respondents (53 percent) bought a warranty for this reason.
Simon Harrison, Sales Director, UK & Ireland for Assurant Solutions, comments: “More and more consumers recognise the value of an extended warranty to protect products they feel are of personal or household importance. And, as the need for purse strings to be tightened continues and disposable income falls, it is apparent that consumers cannot rely on savings to pay for repairs or replacements. Extended warranties are much more affordable than having to purchase a replacement washing machine or freezer or electronic gadget”.
Consumers are also concerned about the cost of repairs as gadgets and appliances become more complex. Six in ten (62 percent) revealed their worries about the cost of repairing technologically advanced gadgets such as tablets and laptops, and as such, see the value of an extended warranty product, in helping them to manage the expense of repairs or replacements.
Simon Harrison continues: “What people don’t necessarily realise is the cost of repairs for gadgets, together with the cost of labour can end up being more than the cost of the gadget itself, particularly as they become more intricate and complex. Right now many people simply don’t have much in the way of savings tucked away in the bank that they can simply dip into if they need to repair or replace a broken gadget. It makes economic sense to protect against a significant payout by taking out an insurance product, and more people are choosing this option, rather than hoping that the gadget or appliance doesn’t break down.”
Notes to editors
*An online survey was conducted in September 2012 through an online panel provider, 200 respondents completed the survey. Respondents surveyed include individuals that have purchased extended warranty insurance for new or existing products in the last 12 months.