Consumers will pay nearly $40 billion this year for product protection plans, despite the best efforts of the watchdogs who tell them not to. It’s mostly for smartphones and passenger cars, though, because everything else is perceived to be disposable and not worth fixing.
The service contract industry is huge and growing in the U.S., despite the best efforts of critics who, right around this time of year, repeat their outdated “don’t buy extended warranties” message to consumers.
Even our incomplete accounting of the various consumer-facing segments of the service contract industry suggests a market worth almost $40 billion this year, assuming that no polar vortex arrives before Santa. We’ve counted up the total premiums paid by consumers in the vehicle service contract segment, the home warranty segment, the retail brown and white goods segments, and the mobile phone insurance segment, and the total market estimate we come up with for this year is $39.5 billion to be paid by U.S. consumers for what we’ll call product protection plans.
And that’s not counting the jewelry, furniture, and sports equipment sectors, which we’ll get around to sizing in 2015, we hope. And that’s also not counting the purely business-to-business service contract sector, which covers everything from truck fleets to jet engines, not to mention printers, copiers and coffee machines. And that’s only the U.S. Then there’s the European market, and some Asian, African and South American markets that are just getting it together. They need to be counted too.