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Extended warranties experiencing a revival

By Shaqeel Hussain
Head of Automotive Protection

Inflation impact on the value of extended warranties is significant, as size and frequency of claims increase

Most people are feeling the pinch from the ongoing cost-of-living crisis. And when it comes to the growing costs of car ownership and maintenance, a recent report has associated the pressure on household budgets with a major jump in the number of cars being taken off the road.

Comparison website shared recent DVLA data showing a 77% increase in SORN applications in October, coinciding with a 41-year high inflation rise. Roughly 2.7 million vehicles were officially taken off the road during 2022, saving their owners costs on motor insurance and tax.[1]

Additionally, research by consumer car magazine What Car? revealed that over a third of drivers in the UK are holding on to their car for longer than intended due to the cost-of-living crisis.[2]

12.8% of drivers polled said they planned to save costs by attempting some of their own vehicle servicing, repairs, and maintenance – although results did not show if these drivers are qualified or skilled to complete the work.

In short, the cost of running a car is spiralling in this cost-of-living crisis – so for those still on the road, which products and services are going to offer the best returns and reassurance?


Added value as costs soar

In a cost-of-living crisis – it almost goes without saying – people have less expendable income. When household budgets are forced to adapt to cover essentials, repair funds can dwindle, and the cost of vital repair or maintenance work can make a big hole in personal finances.

In the UK, we have seen up to 20% inflation on parts costs in the last 12 months, whilst labour retention rates have also gone up in line with inflation. We expect to see more of the same in the coming year with no short-term change in the factors influencing inflation.

With labour, an engine or gearbox problem is likely to cost a few thousand pounds. The average UK motor repair claim is now around £700, and for a lot of people, that’s really going to hurt your wallet.

A warranty product provides cover for mechanical and electrical failure of a vehicle, protecting drivers against unexpected and expensive repair costs. At a time when repair costs are rising rapidly with inflation and supply chain issues, pre-purchased warranty products are really demonstrating excellent added value.

Without a warranty or extended warranty product, customers can be significantly out of pocket if a repair is needed – so this type of cover extends to protecting customer peace of mind too.

Consumer interest in extended warranties is increasing in the current climate, and feedback from the dealer network is that drivers are being much more diligent in their buying processes and more risk averse to unforeseen cost exposure.

Data has shown that demand for warranty products increases during times of financial uncertainty and many drivers are spending more time considering and planning for the impact of unexpected costs, whereas in the past we may have seen more consumers taking a chance on repairs not being needed.

Warranty products also include other benefits such as protecting people from MOT failures (subject to terms and conditions) or covering the cost of recovery, which can be very expensive if required urgently on the motorway, for example.


Claims frequency is growing

With so many people working from home after the global pandemic, there has been a shift in driving patterns resulting in more short journeys. Short spells of driving take their toll on engines, as the first few minutes running from cold are always the biggest contributors for general engine wear.

These short journeys also clog up vehicle emissions systems. Catalytic convertors, diesel particulate filters (DPF) and exhaust gas recirculation (EGR) valves are designed to be run at normal operating temperature to burn off any deposits. However, if people are not doing regular motorway or dual carriageway driving and this doesn’t happen, the repair needs become more frequent. Lack of investment in UK roads is also starting to become apparent, and this is taking a toll on springs and suspension components.

It is important to remember that vehicles are complex machinery and things will always go wrong – but extended warranties mitigate against the cost of repairs when this inevitably happens.

Cushioning people from financial shocks by spreading the risk is an old trick – but when repair costs are higher, money is tighter, and claims more frequent, warranties are increasingly becoming a no-brainer.


Supply, logistics and repairs

While supply chain issues are beginning to ease in Q1 of 2023 this is still a significant concern for the motor industry. Dealer networks seem cautiously optimistic for a better supply of new vehicles, but this is from a low starting point and issues remain with parts. Semiconductor shortages are still a problem and supply chain issues continue to put pressure on component costs, adding to the value of an extended warranty product.

Brexit has also had an impact on the logistics of parts imports and many mechanics are finding it harder to get parts into and out of the UK. Much of the European labour workforce based in the UK has now left; there have been shortages of skilled workers to replace this exodus.

Another factor to be aware of is the trend to build units that need to be replaced, rather repaired by replacing individual components. This is further compounded by short supply of parts and labour, which means garages are keen to avoid repairing when it is easier to replace.

With extended warranties, we can help people find repairers with Prestige – our vehicle repair partner – alongside sourcing parts in a reasonable timescale. Where drivers need other non-warranty work done, they can get this done at a reasonable cost within the same booking.



[1] Drivers warned as more than 2 million cars declared off road in 2022 - how to save money |

[2] UK drivers holding on to cars for longer amid cost-of-living crisis (



Further information

We work with automotive manufacturers, distributors and dealerships, and financial institutions to create tailor-made affinity insurance and warranty products. We’ve been active in this specialist market for almost 20 years. During that time, we have become trusted, long-term partners to many of the world’s best known automotive brands.



Your contact

Your contact

Shaqeel Hussain

Shaqeel Hussain

Head of Automotive Protect

+44 7801 925314

Driver tip

Did you know… the most common motor repair claims are engine related.

Always ensure that your vehicle is maintained in accordance with the manufacturers recommendations and always opt to use original equipment manufacturer parts in repairs.