Extended Car Warranties?

Have you seen those commercials on TV for US Fedellis or those other car warratny companies? Sounds like a good deal they pay for your car repairs. My girlfriend asked me about that so I did some research and this is what I found out:
· California has very strict laws and policies related to Extended Car warranties so there are only a very few companies that sell Extended warranty contracts
· I called a couple places one place just didn’t offer warranties and another one offered what is called a “Product Warranty” where you have to add a couple different fluids in your car, it won’t damage the car it’s just the way around California law to say they are covering the “Product” and everything that touched the product so if you pour their engine and transmission fluid in your car then they are allowed to sell you the extended warranty
· The company I called is US Fidelis http://www.usfidelis.com/Default.aspx
o They offer a Enhanced Power train warranty which will require you to add those fluids to your engine and transmission. This will cover the power train to your car which is basically your engine as well as the transmission.
o The “Enhanced” part of the program is that it also covers more than just the power train, such as the starter, water pumps, electrical items, window motors, windshield motors etc.
o US Fidelis is actually a company that represents 5 other warranty companies that service the warranties. They are all insured so that means if any one of them goes bankrupt there will be an insurance company that will pay out the claims. This is important because not all warranty companies are insured.
o You can choose the repair shop they just ask that they shop is an ASE Certified Shop, which most reputable shops are ASE Certified so you can take it to the local Audit Dealer and get them to work on the car.
o ONE QUESTION I FORGOT TO ASK: Is there a limit to the number of claims you can make during your coverage period?
I got two quotes for two different cars:
o 2005 A4 1.8T, 47,000 miles
§ US Fidelis is offering a 5 year “Enhanced Power Train” (see above for what Enhanced Power Train is) coverage plan so from today to April 2014 for an ADDITIONAL 100,000 miles meaning up to 147,000 miles whichever comes first
§ This is also a $0 deductable plan where you pay NO out of pocket costs for claims
§ Total cost is $655 per year or $3,275 for the total 5 year period, your options for payment are:
· Pay the $3,275 in full and you are covered for 5 years which breaks down to $655/year
· There is an interest free finance plan where the down payment is $295 and $124 per month for 24 months and after the 24th payment you will be paid in full and covered.
§ This plan also covers car rentals in case your car needs to be in the shop overnight
§ This plan is nationwide and fully transferable when you sell your car


o 2003 A4 3.0 Cab, 78,000 miles
§ US Fidelis is offering a 5 year “Enhanced Power Train” (see above for what Enhanced Power Train is) coverage plan so from today to April 2014 for an ADDITIONAL 100,000 miles meaning up to 178,000 miles whichever comes first
§ This is also a $0 deductable plan where you pay NO out of pocket costs for claims
§ Total cost is $595 per year or $2,975 for the total 5 year period, your options for payment are:
· Pay the $2,975 in full and you are covered for 5 years which breaks down to $595/year
· There is an interest free finance plan where the down payment is $150 and $117 per month for 24 months and after the 24th payment you will be paid in full and covered.
· This plan also covers car rentals in case your car needs to be in the shop overnight
· This plan is nationwide and fully transferable when you sell your car
· I have read some negative and positive reviews on this Company you may want to read some on your own just do a Google search for “US Fidelis Review” and you can read some of the things other people have to say.
· Also the rates I have quoted above ARE NOT GUARANTEED, So you’ll have to call yourself and get the exact quotes.


· The other alternative is to insure yourself what I mean is that I would open up another savings account and put $500 or $1,000 into that account and then “pay your own” premiums say $150 a month into this account, which if you break it down by paycheck it’s only $75 which is maybe going out one night less for drinks every two weeks. I would put it into an HSBC or ING account so that you’ll earn a decent return or buy a CD or if you’re really brave buy some stock with it. Then every month you’ll just keep “paying” yourself the premium.
· This method has several main advantages:
o You’ll earn all the interest/dividends/returns for yourself and you can reinvest those or earnings or just keep it in your fund for car repairs
o You’ll have control over the funds so you’ll never be denied a claim for any reason
o If you diligent and continue “paying” yourself your coverage will never expire or have mileage limits
o This also can serve as an emergency fund just in case something else happens because you control the money and it’s 100% liquid, you can’t “sell” your US Fidelis policy and make it liquid.
o If you’re luck and you never have any major repairs you just get to pocket the money and buy some Christian Louboutin shoes or whatever
· However this method has two main disadvantages:
o You don’t get instant coverage
o It will take time for you to build your fund
o Doesn’t cover car rental
o If your car breaks down before you can build up your fund you may not have enough
o If you have a really unreliable car then your fund may not have enough to cover multiple break downs
· That’s all the info you I have so good luck