U.S. Extended Warranty Market Outlook – 2028
The U.S. extended warranty market size was valued at $48.93 billion in 2019, and is projected to reach $59.52 billion by 2028, growing at a CAGR of 4.6% from 2020 to 2028. An extended warranty is a kind of insurance policy which provides coverage for repair and replacement cost of various products such as home appliances, mobile, laptop, devices, cars, and others after the manufacturer’s or retailer’s guarantee has expired.
It is an optional warranty offered by manufacturers, dealerships, and independent providers at an extra cost beyond the purchase price of a product. There are numerous advantages provided by an extended warranty over manufacturer’s warranty includes protection of the consumer from electrical & mechanical expenses related to product failures such as oil change, or tire replacement after the OEM warranty ends which is not covered under manufacturer’s warranty, and drives additional revenue for product manufacturers, resellers, and service providers.
The U.S. extended warranty market is expected to exhibit growth during the forecast period. The key factors impacting the growth of the market include increased awareness for extended warranty and rise in penetration of laptops, smartphones, and tablets. In addition, rise in need for advanced promotional strategies, and growth associated with e-commerce industry drives the growth of the U.S. extended warranty market.
Furthermore, decline in sale of PCs is the major restraint that hinder the growth of the market. Moreover, innovative services offered by major extended warranty players, and rise in demand for extended warranty coverage in automobiles are expected to boost the U.S. extended warranty market growth in the future. However, each of these factors is anticipated to have a definite impact on the overall market growth during the forecast period.
On the basis of coverage type, the standard protection plan segment dominated the U.S. extended warranty market share in 2019, and is expected to maintain its dominance in the upcoming years owing to provision of an additional two to three years of coverage against product failure. In addition, this extended warranty plan largely covers mechanical and electrical defects provided by manufacturer’s warranty in the market. This, as a result has become one of the major trends in the standard protection plan market. In addition, the accidental protection plan segment is expected to witness highest growth rate in the upcoming years, owing to this protection plan provides customized coverage’s, which are generally not covered under standard protection plans such as liquid damage and unintentional physical damage.
By Coverage Type
Standard Protection Plan segment will maintain the lead during 2020 - 2028
The report focuses on the growth prospects, restraints, and U.S. extended warranty market analysis. The study provides Porter’s five forces analysis of the U.S. extended warranty industry to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the U.S. extended warranty market trends.
By Distribution Channel
Manufacturers segment will dominate the market during the forecast period
Segment Overview
The U.S. extended warranty market is segmented into coverage type, distribution channel, end user, device type, service type and region. On the basis of coverage type, it is classified into standard protection plan, and accidental protection plan. On the basis of distribution channel, the U.S. extended warranty market is categorized into manufacturers, retailers, and others. As per end user, it is segregated into business, and individuals. By device type, the market is bifurcated into automobiles, consumer electronics, home appliances, mobile devices & PCs, and others. On the basis of service type, the U.S. extended warranty market is bifurcated into home warranty, auto warranty, enterprise equipment warranty and others.
By End User
Individuals segment is projected to be the most lucrative segment
Competitive Analysis
The market players operating in the U.S. extended warranty industry include ASSURANT INC., American International Group Inc., AmTrust Financial, Asurion, CARCHEX, CarShield LLC, Endurance Warranty Services LLC, Liberty Bell Auto Protect, Protect My Car, and SquareTrade Inc. These key players have adopted various strategies, such as product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations, to increase their market penetration and strengthen their foothold in the industry.
By Device Type
Automobiles segment will dominate the market during 2020 - 2028
COVID-19 Impact Analysis
Although the COVID-19 outbreak negatively impacts the growth of the U.S. extended warranty market, the industry is expected to recover by the third quarter of 2020. COVID-19 made majority of people to understand the importance of extended warranty in their lives, as it is a financial readymade solution for unforeseen situations. Although these were short-distance travel during lockdown, this does not guarantee safety against theft, accident, and collision. Increased awareness of extended warranty among consumers, essentials of car components coverage, and restarting of tourism are expected to provide numerous opportunities for the market expansion in the upcoming years.
By Service Type
Auto Warranty segment generated the highest revenue in 2019
For instance, Uproar. Car is an American-based company provides transparent and affordable auto warranties. Uproar.car’s warranty coverage protect the cars against expensive repairs from bumper to bumper, gives exclusive access discounts, auto concierge service, and a 100 percent online claims process. However, that this coverage does not extend to some luxury vehicles, cars over 120,000 miles, and cars more than 10 years old. Introduction of usage-based extended warranty policies is further expected to provide potential growth opportunities for extended warranties companies in the coming years.
Top Impacting Factors
Increase in Demand For Innovative Products
Various extended warranty companies across the globe are introducing new strategies to improve their market value and surge their revenue as well as enhance their customer experience. Some of the extended warranty companies are providing applications and other technologically advanced services to their customers to keep their customer safe from the pandemic situation. For instance, Endurance is one of the fastest-growing companies in the extended warranty industry, based in Northbrook, Illinois launched Endurance Advantage extended warranty plan.
This plan covers both mechanical breakdowns as well as maintenance and provide cost up to $3,500 in maintenance, including oil and filter changes, brake pad and wiper replacements. Therefore, such new advanced services have become a major trend in the extended warranty industry, which, in turn, boosts the U.S. extended warranty market growth.
High Adoption of Smartphones
Extended warranty has become innovative with the rapid evolution of smartphones as the use of modern technology and marketing strategies create different ways for tech-savvy smartphone users that combine all the services into one convenient package. Thus, increase in adoption of smartphones boosts the growth of the U.S. extended market by providing many easy solutions to the customers. For instance, Amazon, Best Buy, and Walmart are some of the biggest sellers of extended warranties in the U.S. today. They launch various warranty programs to retain and build their relationship with customers.
As of September 2019, the penetration of smart phones in the U.S. was limited to only 58% of the total population. However, over the years, the number of smart phone users is estimated to exceed 43 million, i.e., 69% of the total population. High promotion and loyalty programs associated with extended warranties are anticipated to fuel the usage of extended warranty among smart phone users, especially among online shoppers.
Key Benefits For Stakeholders
- This study includes the U.S. extended warranty market forecast, and future estimations to determine the imminent investment pockets.
- The report presents information related to key drivers, restraints, and U.S. extended warranty opportunity.
- The U.S. extended warranty market size is quantitatively analyzed from 2020 to 2028 to highlight the financial competency of the industry.
- Porter’s five forces analysis illustrates the potency of buyers & suppliers in U.S. extended warranty market.
U.S. Extended Warranty Market Key Segments
By Coverage
- Standard Protection Plan
- Accidental Protection Plan
By Distribution Channel
- Manufacturers
- Retailers
- Others
By End User
- Business
- Individuals
By Device Type
- Automobiles
- Consumer Electronics
- Home Appliances
- Mobile Devices & PCs
- Others
By Service Type
- Home Warranty
- Auto Warranty
- Enterprise Equipment Warranty
- Others
Key Market Players
- ASSURANT INC.
- American International Group Inc.
- AmTrust Financial
- Asurion
- CARCHEX
- CarShield LLC
- Endurance WarrantyServices LLC
- Liberty Bell Auto Protect
- Protect My Car
- SQUARETRADE Inc.
U.S. Extended Warranty Market Report Highlights
| Aspects | Details |
 By Coverage |
|
 By Distribution Channel |
|
 By End User |
|
 By Device Type |
|
 By Service Type |
|
 By Region |
|
 Key Market Players | ASSURANT INC., Liberty Bell Auto Protect, American International Group Inc., CarShield LLC, Protect My Car, CARCHEX, Endurance WarrantyServices LLC, SQUARETRADE Inc., AmTrust Financial, Asurion |
Analyst Review
Extended warranty, also known as service agreement or protection plan, provides coverages to increase the length of protection for large purchases. It provides coverages for multiple types of products & brands, ranging from appliances to electronics, wearables, computer equipment, mobile products, and others. In addition, manufacturers tend to deal with limited product & brand set to provide extended warranty as the licensing & credentialing requirements largely differ from other insurance coverages.
Furthermore, extended warranty protection plan is a separate agreement purchase by consumers and are designed to provide additional protection for their products. However, consumers face several challenges while dealing with extended warranties. For instance, retailers that do not repair in the store, generally sell extended warranties, which are third-party policies. Therefore, though consumers buy the warranties from retailers, another company handles claim processes.
In accordance with several interviews that were conducted of the top level CXOs, extended warranty providers are looking forward to expand their offerings and provide customized coverages for their customers. In addition, products such as automobiles, customer electronics, home appliances, and wearables are the major adopters of extended warranty coverages in the market. Therefore, insurers have lucrative opportunities to innovate their existing plans and expand their product offerings in the untapped potential of emerging economies. Nevertheless, a considerable number of companies remain under the perception that they have minimum extended warranty exposure.
The U.S. Extended Warranty Market is estimated to grow at a CAGR of 4.6% from 2020 to 2028.
The U.S. Extended Warranty Market is projected to reach $59.52 billion by 2028.
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Increased awareness for extended warranty, and rise in penetration of laptops, smartphones, & tablets etc. boost the U.S. Extended Warranty market growth.
The key players profiled in the report include ASSURANT INC., American International Group Inc., AmTrust Financial, Asurion, and many more.
On the basis of top growing big corporations, we select top 10 players.
The U.S. Extended Warranty Market is segmented on the basis of coverage type, distribution channel, end user, device type, service type and region.
The key growth strategies of U.S. Extended Warranty Market players include product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations.
Home Appliances segment would grow at a highest CAGR of 6.4% during the forecast period.
Manufacturers segment will dominate the market by the end of 2028.
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