For used Vehicle Service Contracts (VSCs), losses generally come in faster than a pro rata distribution. A useful rule of thumb is that half of the losses have emerged when the term is one-third expired, and two-thirds of the losses are emerged when the term is half done. For example, on a two-year term used VSC, two-thirds of the losses have emerged one year into the term. One primary reason for this accelerated loss pattern is that mechanical problems on used vehicles often occur pretty quickly after the sale.

On new VSCs the earning is somewhat trickier. First, very few losses are expected under the extended warranty while the underlying warranty has not expired. The only losses during this period would be towing or rental expenses over and beyond what the underlying covers. Once the underlying warranty has expired, losses emerge on the extended warranty cover. As the frequency and severity of repairs are expected to increase during the remainder of the service contract we would envision an ever-increasing loss payout pattern.

However, in actuality, while loss emergence does accelerate for a period of time after the expiration of the underlying warranty, this emergence slows down considerably towards the end of the term. This variable is sometimes called the attrition factor. Several things may happen during the life of the VSC; the mileage limit could be hit before the term limit, the car may be sold and the warranty not transferred, the owner voids the warranty by poor maintenance, or even the owner just doesn't keep track of the warranty contract. In any event, this attrition factor does exist, and it causes the loss payout pattern to take an "S" shape, slow starting out, grows quickly in the middle and slows down at the end.