Skip to content

New, Original Consumer Survey of Americans Offers Insights About the Value of Service Contracts

Amid and after the holiday buying season, consumers may wonder whether a service contract is worth it. New, original research from the Service Contract Industry Council offers insights into why and how service contracts are beneficial.

A September 2016 survey of more than 400 Americans has found that consumers can greatly benefit from service contracts (often referred to as extended warranties) – especially during and after this busy holiday season. The survey revealed that more than half of American consumers have spent money in the past year replacing or repairing broken electronics and home appliances, and 89 percent of vehicles with more than 100,000 miles on them don’t have a factory or extended warranty.

“This survey shows why service contracts are great investments for consumers looking for peace of mind,” said SCIC Executive Director Tim Meenan. “With holiday gift buying, meals and hosting guests on the mind – not everyone is saving up for when an electronic, home appliance or auto catastrophe might occur. With a small upfront investment in the service contract, consumers are covered for worst-case scenarios.”

SCIC, which advocates for fair and balanced regulation of the service contract industry to ensure consumers are protected, broke the survey down into three broad categories in which service contracts are offered: electronics, homes, and automobiles.


Consumer electronics service contracts provide protection for malfunctioning or accidentally damaged goods during and after the manufacturer’s warranty. Many are sold by retailers at the point of sale but a consumer can also purchase this valuable protection subsequent to the purchase of the product itself online.

The survey found that:

  • 46 percent of respondents have purchased a service contract covering electronics.
  • 70 percent of people have broken an electronic device in the past year, with cell phones ranking highest in frequency for breaking or malfunctioning.
  • 61 percent of people have spent money in the past year replacing or repairing broken electronics.
  • 45 percent of respondents report that they have discarded an electronic device in the past year rather than paying to have it fixed.
  • The younger the person, the more likely they are to break a consumer electronic.
  • The more kids you have, the more likely you are to break or suffer from a broken electronic.


Home service contracts protect homeowners from major home system and appliance repair and replacement expenditures, and they eliminate the hassle and inconvenience of locating qualified repair contractors. Consumers can purchase home service contracts from Realtors, builders or companies that specialize in the buying and selling of home service contracts. They can be purchased anytime during homeownership and are often sold during the buying and selling process.

The survey found that:

  • 69 percent of respondents have broken a home appliance in the past year.
  • 62 percent of respondents report that they have spent money replacing or repairing broken home appliances in the past year. Of these, the plurality (35%) report spending $300 or more doing so.
  • Two-thirds of homeowners reported that they needed to repair or replace a home appliance in the past year.
  • About 1 in 5 homeowners report that they have had a damaged air conditioning or heating system in the past year, followed closely by plumbing systems, washer/dryers, refrigerators, and dishwashers.
  • The likelihood of spending $100 or $200 or more on appliance repairs is NOT related to the number of repairs one makes in a year. Breaking just one appliance is the strongest predictor of spending at least $100 or $200 on repairs each year. In other words, ANY major appliance repair, without a service contract, is likely to cost $200 much or greater.


Auto service contracts are available for both new and used vehicles. Depending on the coverage purchased, a service contract can cover a vehicle’s exhaust system, brakes, electrical system, engine, gas tank, heater, air conditioning, leather seats, sunroof, transmission and more.

The survey found that:

  • 86 percent of respondents own a vehicle.
  • About equal portions report that their vehicle has the following number of miles on it:
  • 34% < 50,000 miles
  • 31% 50,000 – 100,000 miles
  • 35% > 100,000 miles
  • 60 percent of respondents say that they have NOT had to repair their vehicle in the past year. Of the remaining 40% of car owners, brakes, batteries, and air conditioning systems are the most likely to need repair.
  • 63 percent of vehicles with between 50,000 and 100,000 miles and 89 percent of those with 100,000 or greater are not covered by a factory or extended warranty.

This 33-item consumer survey of 434 American consumer respondents was conducted by SCIC in September 2016. The goal of the research was to gain a better understanding of consumer behavior and motivations regarding service contracts.

“It doesn’t matter how few repairs you may need to make—all it takes is one to put a huge dent in your wallet,” Meenan said. “Service contracts help combat product unpredictability to leave you with the high quality every person deserves.”

Back To Top