Issue No. 4 | April 28, 2026

Intelligence for direct marketers in insurance, home services, warranty, and protection.

This Week: The Coverage Gap

THE NUMBER: 44%

Only 44% of eligible U.S. vehicles carry VSC coverage, per Colonnade Advisors’ March 2026 whitepaper. Set against approximately 296.5 million passenger vehicles on U.S. roads, roughly 70% of which fall within the core coverage window, the result is a market where the majority of the addressable audience has no coverage at all. The DTC channel isn’t taking share. It’s capturing demand that was never converted at the point of sale.

The channel is growing accordingly, at a 12.3% CAGR driven by structural tailwinds. Repair costs have risen 13.9% since August 2022, per BLS, compared to 5.6% for general inflation. Wages have grown 30% since 2020 while vehicle maintenance and repair costs rose 46%. The average U.S. vehicle is now 12.8 years old. The consumer most likely to need coverage is the one already driving that car.

THE OPERATIONAL ANGLE

The coverage gap tells you where to find volume. The cancellation curve tells you where to keep it.

Colonnade identifies dealer remarketing as one of the five structural growth drivers in the DTC channel. Dealers with known customers and vehicle histories who did not purchase coverage at the point of sale represent a lower-cost acquisition path. However, the whitepaper also flags what separates DTC unit economics from dealer-originated contracts: visibility. A standalone installment payment gets scrutinized in a way that a rolled-in finance payment does not. It shows up as a separate line item, so the customer evaluates it independently and is more likely to question or cancel it. That drives a different cancellation profile and different timing across the cohort.

Two operators can report identical cancellation rates and produce materially different lifetime economics depending on when those cancellations occur. Understanding where your cancellation curve diverges is not a nice-to-have at 12.3% market growth. It is the operating requirement.

FROM THE BLOG

The DTC VSC Market in 2026: Why the Fastest-Growing F&I Channel Is Just Getting Started

Colonnade’s March 2026 whitepaper confirms that DTC VSC is the fastest-growing segment of automotive F&I, expanding at a 12.3% CAGR. It outlines the structural drivers behind that growth, including repair cost inflation, an aging vehicle fleet, and increasing financial pressure on vehicle owners.

QUICK HIT

A VSC priced at $3,500 to $4,000 over five years converts a variable repair bill into a fixed monthly payment for a consumer base where 58% cannot absorb a $1,000 repair out of pocket. The value proposition is arithmetic, not aspiration.

Until next Tuesday —

If the Colonnade data is changing how you think about your acquisition model or cohort segmentation for Q2, reply here and tell me what you are working on. Happy to think through it.