Coronavirus causing used car warranty surge?

Published:  10 November, 2020

COVID-19 could be the cause of motorists opting for longer and more comprehensive levels of warranty cover for second-hand cars, a study has suggested.

Figures from the RAC Dealer Network indicate that sales of the company’s Platinum Plus warranty, which offers the highest cover in its range,  now account for 8.2% of total warranty sales across the network to date in 2020 compared to 3.6% in 2019. Silver, Gold and Platinum warranties are now taking correspondingly lower percentages of the overall share.

Meanwhile, the average length Platinum Plus warranty –has increased from an average of 9.38 months in 2019 to 15.79 months in 2020, while the lengths of the other levels of cover have barely changed.

Kellie Grocott, RAC Director of Sales at Assurant, which partners with the RAC in the warranty sector, said: “We don’t have evidence to directly link this to the coronavirus crisis but it is generally accepted in our sector that during times when used car buyers might feel more economically vulnerable, sales of motor warranty products that offer higher levels of cover will tend to increase. There is a desire on the part of consumers for better protection against unexpected motoring costs.

“To underline the acceleration we have seen during the last few months, the average length of Platinum Plus warranty sold increased only from 9.03 months in 2018 to 9.38 in 2019 but has then jumped to 15.79 in 2020.”   Kellie added: “That is the most likely explanation for what we are seeing now. While the current boom in used car sales clearly suggests that relatively large numbers of buyers are happy to spend money on a used car, they want reassurance that a comprehensive safety net is in place.”

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