Extended warranty or service contract is an insurance policy that replicates and extends the warranty period of consumer durable goods by a specified period. It covers the cost of replacement, repair, breaking down of the product, and undertakes other coverage as per terms specified in extended warranty plans.
Moreover, extended warranty can be offered by retailers, manufacturers, and other warranty administrators. As it is a prolonged warranty offered to consumers, in addition to standard warranty on new items, extended warranties cost extra based on percentage of the item's retail price.
Increase in awareness for extended warranty for brown goods such as laptops, smartphones, and tablets drive the market growth. Owing to the fact that many products have a costly price tag associated with them, consumers are often worried about safety of their electronic products post expiry of seller's warranty.
Therefore, provision of extended warranty also helps in rebuilding customer loyalty and thus increased awareness for extended warranty propels the market growth. However, owing to decline in sales of PCs since last few years, the coverage of extended warranty policy for PC units has reduced, which is therefore hampering the market growth.
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