The March bankruptcy filing for US Fidelis, the high-profile company that marketed extended service contracts directly to consumers, has rekindled debate over whether customers are best served by bypassing dealerships.
Customer-direct "is a growing business, to say the least," said, Marc Kamin, a spokesman for AA Auto Protection, of West Deptford, N.J., which markets extended service contracts online. "Our position is a lot of people didn't know that a service like ours is available."
Saturation-coverage TV advertising for US Fidelis, including a NASCAR sponsorship, fixed that problem by raising awareness, Kamin said.
AA Auto Protection is a broker for the administrators that actually sell extended service contracts, Kamin said. He compared AA Auto Protection to an independent insurance agent who offers policies from several companies.
"We're able to give the best prices directly because dealerships mark them up. We can sell them more cheaply," Kamin said.
He estimated that the average consumer could save 40 to 60 percent off the price of an identical service contract bought through a dealership, depending on how much the dealership marks it up. Kamin quoted a price of about $1,800 for "bumper-to-bumper" coverage for a couple of common used vehicles, a 2005 Toyota Camry or a 2005 Ford F-150 pickup.
Kamin said a broker such as AA Auto Protection also can offer service contracts for older used cars with higher mileage -- contracts that dealerships likely would not offer.