Nearly 60% of Vehicle Service Contract Buyers Enjoy Peace of Mind

by | 3 minute read

Many Amer­i­can dri­vers who have to pay for unex­pect­ed, major car repairs could be at risk of fac­ing costs they can­not afford. Fifty-one per­cent of con­sumers report­ed pay­ing for major vehi­cle repairs in the last five years, accord­ing to a sur­vey of more than 2,000 Amer­i­cans con­duct­ed online for Ally Finan­cial by The Har­ris Poll. Of con­sumers who report­ed pay­ing for repairs, four in five (80%) said they spent $500 or more, and near­ly three in five (58%) said they spent $1,000 or more. One in three (33%) said they spent $2,000 or more.

Mean­while, a 2018 Fed­er­al Reserve study found that when faced with an unex­pect­ed $400 emer­gency expense, 41% of adults either could not pay the expense, or would need to bor­row mon­ey or sell some­thing to cov­er it. This means that a sig­nif­i­cant por­tion of dri­vers who are faced with unex­pect­ed repairs could not cov­er them out-of-pocket.

"Expen­sive car repairs can cause seri­ous finan­cial stress, espe­cial­ly for those with lit­tle or no emer­gency sav­ings," said Mark Man­zo, pres­i­dent of Ally Insur­ance. "Most major vehi­cle repairs come unex­pect­ed­ly, and stan­dard insur­ance poli­cies usu­al­ly only cov­er repairs in case of acci­dents. The rise of com­plex vehi­cle tech­nol­o­gy and the increase in the num­ber of used vehi­cles on the road have only made repairs more expen­sive and fre­quent."

Accord­ing to Audi­enceS­CAN, 13% of U.S. adults are Poten­tial Auto Insur­ance Switch­ers. Near­ly half (44.8%) are between the ages of 25 and 34, 40.2% live in a met­ro­pol­i­tan area and 21.3% have annu­al house­hold incomes of between $25,000 and $49,999.

There is a solu­tion that could help many con­sumers: vehi­cle ser­vice con­tracts (VSCs), which cov­er repairs that often are not cov­ered by fac­to­ry war­ranties or are no longer cov­ered by expired war­ranties. Only 18% of those sur­veyed report­ed buy­ing a VSC in the last five years. Near­ly three in five (59%) of those who had pur­chased VSCs said the peace of mind that comes from know­ing repairs are cov­ered was the top moti­va­tor for buy­ing the cov­er­age.

Many Poten­tial Auto Insur­ance Switch­ers would like to be more care­ful with mon­ey this year. Accord­ing to Audi­enceS­CAN, it's a per­son­al goal of 35.4% of this audi­ence to reduce debt or increase sav­ings, and 22.3% would like to make pur­chas­es that will help them feel more safe/secure. Near­ly 20% are even plan­ning to pur­chase financial/retirement plan­ning ser­vices this year.

"Ser­vice con­tracts pro­vide cus­tomers with the secu­ri­ty of know­ing they don't have to wor­ry about car repair bills derail­ing their bud­gets or putting them in debt," Man­zo added. "Pay­ments for some VSCs can be rolled into reg­u­lar auto pay­ments, mak­ing it eas­i­er for con­sumers to bud­get and map out their expens­es ahead of time. You can't know when to expect the unex­pect­ed, but you can plan ahead by talk­ing to your deal­er about vehi­cle ser­vice con­tracts."

One of the best medi­ums to tar­get Poten­tial Auto Insur­ance Switch­ers through is the TV. Accord­ing to Audi­enceS­CAN, it's where 45.2% of this audi­ence gets most of their local news and where they saw com­mer­cials that drove 72.1% to action last year. With­in that same time frame, 68.1% took action after receiv­ing direct mail ads and/or coupons. This audi­ence is also 49% more like­ly than oth­er adults to respond to out­door ads, direc­to­ry search ads and pre-roll video ads.

Audi­enceS­CAN data is avail­able for your appli­ca­tions and dash­boards through the Sales­Fu­el API. Media com­pa­nies and agen­cies can access Audi­enceS­CAN data through the Audi­enceS­CAN Reports in AdMall.

Rachel Cagle

Rachel Cagle

Rachel is a Research Ana­lyst, spe­cial­iz­ing in audi­ence intel­li­gence, at Sales­Fu­el. She also helps to main­tain the major accounts and co-op intel­li­gence data­bas­es. As the hold­er of a Bach­e­lors degree in Eng­lish from The Ohio State Uni­ver­si­ty, Rachel helps the rest of the Sales­Fu­el team with their writ­ing needs.