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How Inflation is Affecting the Warranty Business

Written by Chad Burris

September 21, 2022

warranty product protection

Even with inflation at the forefront of everyone’s minds, it is a safe bet that no customers have thought about how it might have affected their warranties that they have already purchased. There is a reality that exists – both furniture and appliances cost more today than when our customers bought them from us two to five years ago. This means that repairing and replacing those items is more expensive as well.

We need to start by remembering this truth: Your customer made an EXCELLENT choice in adding a protection plan onto their product. With EPIC Protect, customers are largely protected from inflation impacts because of the Full Value aspect of our program; no repair costs will be deducted from the replacement value. However, we are seeing situations where a customer who purchased a $2,000 appliance requires a replacement, but the equal replacement unit now costs more than $2,000 (even at wholesale).

The question then arises, “Can the customer receive enough money to cover the full cost of replacement?” As is true with every warranty offering in the industry, the answer is, “No.” Since our program is a one-time, up-front premium collection, we cannot adjust rates for inflation.

This is where it is critical that we, as retailers and customer service experts, lean heavily on the fact that the customer has received a great value with their protection plan. They’ve already been covered for any repairs and are receiving their full dollar amount that they paid for their product to go towards a replacement. Thank goodness they bought protection from you!

In today’s economic climate, it may seem like we are already asking for too much money from our customers, and the temptation exists to not include the warranty in our sales offering. However, it is more important now than ever before to protect the items our customers are purchasing as the costs of repair and replacement can be unbearable.

Protect your customers from the impact of inflation and attach those protection plans!

To learn more about EPIC Protect or our Furniture programs, please contact Chad Burris chad.burris@nationwidegroup.org.

 

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