April 22, 2024

Extended Warranty Market is Anticipated to Witness High Growth Owing to Rising Demand for Post-Purchase Services

An extended warranty is an insurance policy purchased by consumers and small businesses to cover the cost of repairs or replacement of consumer goods such as vehicles, mobile phones, computers, audio-video equipment, and home appliances after the original manufacturer’s warranty expires. Extended warranties provide coverage beyond the initial warranty period offered by the manufacturer and help protect customers from costly repairs caused by normal product usage or unexpected mechanical breakdown issues.

The global Extended Warranty Market size is estimated to be valued at US$ 140.2 million in 2024 and is expected to exhibit a CAGR of 6.6% over the forecast period of 2024 to 2031. The need for extended warranties has increased among customers as expensive electronic products and machinery often breakdown after the expiry of the initial warranty. Extended warranties provide much needed peace of mind to consumers by covering repair and replacement expenses.

Key Takeaways
Key players operating in the extended warranty market are ASSURANT INC., American International Group, Inc., AXA, AmTrust Financial, Asurion, CARCHEX, CarShield LLC, Endurance Warranty Services LLC, Edel Assurance, SquareTrade, Inc., and Others. ASSURANT INC. is one of the leading providers of extended warranty solutions with strong presence across the United States and various international markets.

The extended warranty market provides numerous opportunities for growth owing to rising sales of consumer durable goods and heavy machinery. Major manufacturers are focusing on offering customized extended warranty plans as per the requirements of various industries to gain more customers. Post-pandemic, demand for extended warranty services is increasing from sectors like consumer electronics, healthcare devices, automotive, and appliances.

Key players are expanding their global footprint by establishing partnerships with local insurers and retailers in international markets. ASSURANT INC. acquired Hyperion Insurance Group in 2021 to strengthen its commercial warranty business across Europe and Latin America. Increased M&A activities are helping market players to penetrate untapped regional extended warranty markets.

Market Drivers
Increasing demand for protection of expensive electronics and appliances is a key growth driver. High repair costs of products like smartphones, laptops, washing machines etc. is encouraging more buyers to opt for extended warranty plans.

Another major market driver is manufacturers offering extended warranty plans as a value-added service. Numerous OEMs bundle extended warranties along with product purchase to boost sales.

Market Restraints
Lack of awareness about available extended warranty options act as a restraint. Many buyers in developing nations are unaware of benefits of extended coverage plans.

Stringent underwriting standards followed by insurers also limit market growth. Only products meeting eligibility criteria are covered which leaves out certain liability-prone goods.

Segment Analysis
Consumer electronics dominated the extended warranty market with a share of over 30%. The increasing sales of smartphones, laptops, tablets and other consumer electronics are driving the demand for extended warranties for these products. Many consumers prefer extended warranty as it provides coverage against mechanical or electrical failure after the expiry of the original manufacturer warranty.
Automotive extended warranty is another major segment. Vehicles are expensive assets and an extended warranty provides financial protection against unexpected repair costs. The complex nature of automotive parts and technologies makes them prone to faults. This increases the need for automotive extended warranties especially for used vehicles.

Global Analysis
North America accounts for the largest share in the global Extended Warranty Market due to the presence of major players and strong consumer preference for post-purchase services. The market in the region is expected to grow at a moderate CAGR during the forecast period.
Asia Pacific is projected to witness the highest growth rate during the forecast period. Countries like China, India and Southeast Asian nations are witnessing rising disposable incomes and growing sales of consumer electronics and automobiles. Increased awareness among consumers regarding the benefits of extended warranties is driving the market in Asia Pacific.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it