Sales of Service Contracts and Extended Warranties Remains Strong Despite Economy

Consumers remain committed to purchasing service contracts (sometimes referred to as extended warranties), particularly for electronic products and appliances, according to the Service Contract Industry Council. Consumer Spending logo

N.E.W. Customer Service Cos recently reported "the percent of people who added a service contract to their purchase increased by 10% (in 2009)." The trend is expected to continue through the holiday buying season and into 2010.

"Consumers are seeking to spend wisely, tend to be more risk averse and are less willing to absorb the cost of an unexpected product repair or replacement," said SCIC Executive Director Timothy Meenan. "Coupling a service contract with a purchase helps consumers and gift-​recipients keep products longer and performing well after a limited manufacturers warranty expires."

  • Consumers are expected to spend $1.3 billion on extended warranties for electronics and appliances this holiday season.
  • 26% of consumers plan to purchase computers and video games, 13% game consoles, and 12% home electronics, up 3% from 2008.
  • 70% of consumers find service contracts inexpensive compared to repair costs.
  • In 2008, 42% of consumers bought a warranty for their laptop or desktop computer, an increase from 37% in 2007.

Most service contracts remain valid when a retailer closes for business. This is due largely to the SCIC's efforts to regulate the industry on a state-​by-​state basis with laws mandating stringent financial responsibility requirements for companies obligated to perform under a service contract.

Data compiled by the Service Contract Industry Council (SCIC), November 12, 2009.  Website: www​.go​-scic​.com.