Computers on wheels: Sole tech coverage a budget-friendly alternative to full VSCs

As vehicle technology advances, coverage of electronics only has emerged as an alternative to full vehicle service contracts.

The coverage is generally aimed at technology that often is replaced rather than repaired, such as vehicle safety systems, infotainment hardware or cameras. Providers say it's a lower-cost alternative to full-coverage vehicle service contracts and has been sparked by both dealer and consumer interest, as well as personal familiarity with everyday technology breaking — such as mobile phones or laptops.

As vehicles become more electrified and software advances, it only makes sense coverage expands to these systems — whether that's standalone coverage or part of a broader package, according to Tom Keepers, executive director of the Motor Vehicle Protection Products Association. Consumers in general are becoming more aware of electronic protection, but it's important they pay attention to what their contract covers, he said.

Ally, APCO, JM&A and AUL are a few providers offering unique vehicle tech-specific protection plans.

The latest launch is TechCare, a product by EasyCare, an APCO Insurance brand. Launched in September, TechCare protects in-vehicle technology such as cameras, speakers and screens, as well as vehicle safety features.

For a price-conscious customer, TechCare coverage is a reasonable fallback from a full-coverage contract, said Rob Volatile, managing director at EasyCare. Consumers can easily equate the difficulties and expenses brought on by their smartphone breaking to the technology in their car, he said.

"Cars are more and more like rolling computers these days," Volatile said, adding tech repairs are different from mechanical repairs because they typically involve full replacements that can cost thousands.

"That replacement is typically found at the dealership if they're OEM parts, which then you have to ask yourself if you're a consumer, 'Do I want an OEM part fixing the tech in my car?' The answer is going to be pretty much 100 percent yes," Volatile said.

TechCare also was created with the future in mind, specifically increasing EV ownership, which Volatile notes often bring on consumer misconceptions about needed coverage. EasyCare reports EVs have more than 70 percent of components in common with gasoline-powered vehicles. Despite doing away with an engine, EVs also will need repairs, and TechCare is one way to customize it, Volatile said.

The adoption rate of TechCare has been slow, but in his 30 years in the finance and insurance industry, Volatile said its popularity is typical for a new product. He expects interest to significantly increase in the next six to eight months.

AUL Corp. also offers a tech-only service contract, which was launched in 2020 and aims to cover vehicle technology systems rather than individual parts, said Paul McCarthy, vice president of sales at Protective Asset Protection, which acquired AUL in May.

Launched following demand from dealers, AUL-Tech, like TechCare, is for the budget-conscious consumer who may be confident in vehicle mechanics but unsure about vehicle tech, McCarthy said. Prices vary greatly, but AUL-Tech can cost as much as 50 percent less than a full-coverage contract.

For some repairs, consumers think, "I could watch a YouTube video and I could fix this," McCarthy said.

However, tech coverage is appealing because technology components are not only expensive but also not a do-it-yourself job, he said.

JM&A Group developed its technology service contract at the request of one of its largest dealer clients, said Chris May, director of product innovation and intelligence at JM&A. It's selling well to that dealer's clientele, but the tech-only product isn't sold by most of its dealers, he said.

When dealers ask JM&A for product recommendations, the group suggests products with the highest consumer satisfaction rates, which are those with the most comprehensive coverage, May said.

Misconceptions about what a tech-only product covers can leave a consumer unsatisfied; however, May noted the group's dealers who do sell it, sell it well.

Specific coverage like the Technology Service Contract requires clear communication with the customer, well-trained F&I managers and proper disclosures so the consumer understands what the plan covers and doesn't, May said.

Ally's tech-specific plan FeatureGuard was inspired by dealer feedback and attention to advancing vehicle technology. It's not a major portion of business, but its policy count has tripled since October 2021 and is growing in popularity, according to Gabe Garroni, Ally's vice president of sales.

As Ally's market is more aware of the product, Garroni anticipates popularity to grow further.

"The whole point of any sort of insurance product is to put into my budget something that prevents out-of-pocket expenses down the road that would be difficult to pay for and I think this is a good alternative," Garroni said.