Do We Class B Owners Subsidize Roadside Assistance???

[peteco]

I have had various Roadside Assistance plans over the years: mainly AAA and Good Sam. Right now I just have my basic State Farm coverage, which is not very extensive, but at least they can find me someone if broken down in Timbuktu. One beef I have is that all RVs are lumped together in the plan. Doesn't matter if you have a gargantuan Class A diesel pusher that would require a heavy duty wrecker, or our class B, which does require a flatbed, but that would certainly be way cheaper to provide than what the Class A requires. Or a towed vehicle which would require two tow vehicles. But we pay the same rate for our B.

It would be nice if a company would offer a class B specific plan. Ideally it should be cheaper than the other all vehicle inclusive plans. I wonder what the old Roadtrek company negotiated when they had Roadside assistance on new Roadtreks.

 

[mumkin]

This is what all insurance does... we that never use it subsidize those that do. That is they system.

 

[avanti]

This is what all insurance does... we that never use it subsidize those that do. That is they system.

I think OP's point is that vans are cheaper to tow than Class As, and so should be charged less.

However, I suspect that the percentage of their customers who are actually ever towed is so small that the difference to their revenue would be de minimus, and so not worth the complexity of an elaborate multi-tiered pricing scheme. It costs just as much to bring gas to a van as to a bus.

 

[N147JK]

That makes sense to you and I but insurance is a for-profit business, same as any other. If a system that divided services by RV type made them more money, they would do it. Regardless, if you think insurance is a honest business, think about how the health care insurance industry in this country works - a total disgrace.

 

[Dave in Nevada]

I am sure the insurance companies could split it up and price differently based on size or weight. But like anything else you have to look at bottom line profit. If they sell to everyone at the same price and make $30 off everyone VS breaking down the price and making more on some and less on others, does it improve the bottom line? I think the pricing is based on what is best for their bottom line. One thing I do have to say, DO NOT go buy extended warranties on everything you own. According to Consumer Reports a bunch of years ago about the only thing worth having an extended warranty on is a laptop. But that was in the days when they were $1000 each. Today I just pocket all the money I would spend on extended warranties and plan of paying for my own problems.

 

[peteco]

I am sure the insurance companies could split it up and price differently based on size or weight. But like anything else you have to look at bottom line profit. If they sell to everyone at the same price and make $30 off everyone VS breaking down the price and making more on some and less on others, does it improve the bottom line? I think the pricing is based on what is best for their bottom line.

Using your example of making $30 average off everyone (on a $100 yearly premium) here was how I am guessing at a breakdown. They make:

$15 off Class A
$20 off Class C
$25 off towed vehicles
$45 off Class B

So if they want to make $30 off each, the hypothetical premium would be:
$115 Class A
$110 Class C
$105 towed vehicles
$85 Class B

But they charge everyone $100 (or whatever they amount is) because there is no competitor offering a better product for individual classes.

So my proposition to Insurance Company X is: provide a roadservice plan just for class B RV. Charge $85. They will attract the folks currently paying $100 at the other companies.

 

[peteco]

In my present case, I am using the roadside assistance plan offered in conjunction with my State Farm insurance. It costs me $7.20 per year. Some other auto insurance companies offer similar low price plans in conjunction with the insurance policy. The coverage is somewhat limited but what it gets me is they find a service company for me wherever I break down. I view it such that I am banking over $100 each year that can be used to pay for whatever the Roadside Service does not cover.

I am pretty OCD on my vehicle maintenance and I have only had one breakdown that needed a tow in 12 years owning the Roadtrek, which was when an ignition related wire broke (or was chewed through) at my house. I also carry a spare.

 

[avanti]

here was how I am guessing at a breakdown. They make:

$15 off Class A
$20 off Class C
$25 off towed vehicles
$45 off Class B

As I said above, the problem with your analysis is that these numbers are pure "guesses". In order to estimate how much more it costs to insure a Class A than a Class C, we would have to know (a) how much more the tow of a Class A costs than the tow of a Class C AND (b) what percentage of their customers require a tow in a given year. If the latter number is small, then the difference between Class As and Class Cs is correspondingly small.

It seems likely that the number IS likely small. Indeed, if I am typical, I suspect that the average customer makes no claims at all in an average year. If this is true, the cost difference between insuring Class As and Class Cs may well be too small to worry about.

 

[RossWilliams]

Add on

Tow insurance through your insurance company is likely at least partially an amenity to sell you the policy. I doubt many class b owners are going to switch insurance companies to get a lower cost tow service. And the insurance company may already be making more money on the class A's insurance than class B.

 

[CHRIS1u]

Insurance companies are not charities, and they try to set their rates to cover their costs and still make a profit. They try to set rates to reflect the relative financial risk for each category of insurance and even based on the history of the particular insured. Most are regulated.

Sometimes, for various reasons, their rates get out of whack. That's why it pays to shop several sources.