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April 19, 2022
According to Bankrate, 276 million vehicles are registered in America. From commerce to private use, cars have taken hold of the world, especially in the United States.
Another fact is that cars are oftentimes expensive to repair. Nothing lasts forever and parts break. Warranties can cover costly bills, which is why many consumers rely on them.
The demand for car warranties has created an industry that is just as lucrative as car manufacturing.
For more stats, check out our list of 80 Car Buying Statistics & Trends for 2022 >>
Table of Contents
The COVID-19 pandemic negatively impacted the auto extended warranty market. However, the rise in costly repair bills is predicted to contribute to the market’s growth in the future.
11. Who Are the Top Extended Warranty Providers?
Looking at several reliable sources can give you an idea of who consumers trust. Providers who usually outshine their competitors include:
- autopom! (4.53 out of 5 customer rating)
- Concord Auto Protect (4.7 out of 5 customer rating)
- Omega Auto Care (4.46 out of 5 customer rating)
- Protect My Car (4.21 out of 5 customer rating)
- Toco (4.41 out of 5 customer rating)
(CarTalk, Investopedia, MarketWatch, Better Business Bureau)
12. Are Extended Warranty Prices Increasing?
Although prices vary from driver to driver, pricing for extended warranties is trending upwards. The average price paid for coverage in 2014 was just over $1,200. In 2022, it doubled to over $2,400. (Consumer Report, MarketWatch)
13. How Big Is the Car Extended Warranty Market?
The global auto extended warranty market size was valued at $34.19 billion in 2020. The market size is expected to increase by 1% in 2022. (Allied Market Research, IBISWorld)
Demographics demonstrate a general understanding of the different characteristics of a consumer base. Warranty providers can use this information when developing services and marketing campaigns.
20. Who Buys Extended Warranties?
Young consumers comprise the majority of extended warranty owners. 54% are between the ages of 16 and 24. (PEGA)
21. How Many People Get an Extended Warranty?
In 2018, 37% of car owners had active extended warranties. One report suggests that 1 in 10 warranty owners actually use their coverage. (PEGA, NerdWallet)
22. Why Do People Not Get an Extended Warranty?
35% of consumers do not own an extended warranty because it is too expensive. 32% said they skip additional coverage because they do not think they will ever use it. (PEGA)
Observing how consumers value their warranties can help determine if it is worth investing in coverage. Their purchase behavior can also influence how warranty providers price their products and services.
34. What Is the Most Popular Level of Coverage for Extended Warranties?
Over 60% percent of consumers purchased bumper-to-bumper coverage, which is closest to the manufacturer's basic factory warranty. (Consumer Reports)
35. What Is the Average Cost of an Extended Warranty?
On average, extended car warranties can cost anywhere from $1,000 to $3,000. Luxury models tend to be closer to the high-end of that price range. (WalletHub)
36. How Often Do People Use Their Extended Warranty?
Less than half of consumers who purchase an extended warranty for their car end up using it. One survey found that 55% of consumers who purchased an extended warranty never used it. (Consumer Reports)
A warranty’s worth is partially defined by its coverage and how fast claims are processed. Some warranty providers automatically pay for repairs and some reimburse policy owners. Each provider has different procedures.
48. What Is the Average Car Warranty Claims Rate?
The average claims rate was 2.7% in 2020. (Warranty Week)
49. How Long Does It Take To Get Paid for a Claim?
Most companies that issue warranty refunds usually do so within four to six weeks from the request. (Do Not Pay)
COVID-19 affected vehicle inventories, car travel, and extended warranties. Lockdowns and shutdowns resulted in lower demand for new vehicles across the globe. As the public health emergency passes and the economy recovers, warranty industry revenue is forecast to increase.
Certain studies show that a sizable portion of car owners can not afford sudden repair bills – bills that might be higher depending on the car brand, broken part, and where the repairs take place.
71. What Is the Average Repair Cost for a Car?
The average car repair bill is around $600. However, some repairs go beyond that price point. A fuel pump can cost upwards of $2,000 to fix. Transmission repairs can total $5,000. (Allied Market Research)
72. What Is the Most Expensive Car Part to Repair?
A car engine can cost between $7,000 to $10,000 to repair. Some people tend to buy a new car rather than pay a hefty bill. (PMC)
73. What Is the Most Common Car Problem?
Faulty batteries are the most common reason cars break down. New batteries usually cost between $50 to $120. Mechanics can charge $10 to $100 for installation. Other common car problems include:
- Brake Issues: $300 to $800
- Low Coolant: <$20 to refill
- Exterior Scratches and Dents: $75 to $2,500
- Worn Shocks and Struts: $450 and $900 for one pair
- Worn Tires: $300 to $400 per axle
- Windshield Damage: $100 to $400
(The Automobile Association, MotorBiscuit, CARFAX)
The auto extended warranty industry continues to grow in the face of recent setbacks. As the economy rebounds and demand picks back up, warranty providers might see a surge in policy sales, especially since it seems that repair costs continue to rise.
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