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Accidental Damage Coverage: What Is It, Why Customers Want It, and How It Works

Accidental Damage Coverage: What Is It, Why Customers Want It, and How It Works

Human beings, by our very nature, are concerned about the future. Economist Daniel Kahneman has coined that term“loss aversion.” The phrase describes the fact that losing something causes us a greater negative impact than gaining something does.

It’s part of the way our brains work, according to Scientific American . We process perceived value and reward differently when evaluating potential losses versus potential gains.

That’s why we worry about accidents happening to us or our things — and why merchants can give their customers true peace of mind by offering them coverage in the case that something does go wrong. 

Here, we explore what accidental damage coverage is, how it compares to other extended warranties, and why customers want it. 

What is accidental damage from handling — and how is it different from other extended warranties?

When you think of handling, don’t think “shipping and.” Handling refers to how a product is used by customers.

Accidental damage from handling is extra coverage on top of a regular extended warranty.

Here’s what each kind of coverage is:

  • Extended warranties: These build on manufacturer’s warranties by adding more time to their coverage at a marginal cost. They cover products in the case that real-world use reveals previously unknown flaws in the product’s design, materials, or construction.

  • Accidental damage from handling: These cover a wider range of incidents, including customer accidents.

And here’s how they compare:

Why do customers want accidental damage from handling?

Customers want the peace of mind of knowing that if they damage their purchase, they’ll be covered.

Who among us has not accidentally damaged something we’ve bought? Raise your hand.

I unfortunately cannot raise my hand. A few years ago, I dropped my phone in a lake. (It did not survive the watery plunge.) Then, I dropped a different phone at a train station and the screen shattered. In the second case, I’d bought accident protection after breaking my first phone, so I was covered. It was a relief.

(My current phone has been going strong for a few years now, but please immediately knock on wood after reading that sentence.)

On the subject of phones, a 2019 survey done by OnePoll on behalf of Phone Loops found that 52% of Americans are “always” worried about the safety of their phone. They also found that the average person polled drops their phone on the ground four times a week. 

Using products comes with the risk that we damage them. That’s just how usage works. Accidents happen, after all. 

Clyde’s Senior Director of Product, Caitlyn Campbell, agrees. “It’s impossible to predict that you’ll drop your glass coffee carafe or sit on your laptop that was in the armchair or soak your sofa with a glass of wine. And what about a power surge during a summer storm?”

While accidents that damage or destroy a product might not be a brand’s fault, they can still be a customer satisfaction risk. “Customers will want their product to be fixed or cleaned or replaced, and they’ll often expect the brand to follow through on that expectation. Extended warranties with accidental damage protection can be a nice upgrade that brands can offer their customers,” says Campbell. 

“Especially for merchants that have long customer lifecycles, high price points, or high-end brands, offering the option of accidental damage protection can signal quality.”

Offering accidental damage coverage lets customers worry less about something important to them breaking. It helps them assuage a very human concern for the long-term functionality of their things. Said otherwise, it provides peace of mind. 

Is it any surprise — especially with the last two years of surprise headline after surprise headline — that people want that?

Start offering accidental damage coverage with Clyde

The top reason that customers stop shopping with a brand is because they have a bad experience with that brand’s product or service, per a 2022 PwC survey .

That’s not always the brand’s fault. But if a customer does have a less-than-stellar experience with a purchase of theirs, that can be the end of a customer-brand relationship — and the loyalty and strong long-term value that might otherwise come from it. Offering extended warranties with accidental damage from handling is a way for brands to build trust in an environment where trust has never been more important — or harder to earn.

And the repercussions are huge. While customers will leave a brand for a bad experience, they’ll help that brand grow if they have a good one. 

Per PwC, 52% of customers across generations recommend brands they like to friends and family; 48% sign up for their favorite brands’ loyalty program; and 25% provide feedback to the brand on their products or services. 

Word of mouth, repeat purchases, and customer feedback can be invaluable, and all require customer trust. 

Let Clyde help you build that trust by enriching your customers’ ownership experience. Sign up for a demo today .

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