How To Partner With Top Insurance Companies

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How To Partner With Top Insurance Companies

How To Partner With Top Insurance Companies

One of the quickest and pain-free ways of getting involved in the towing business is to partner with insurance companies that offer roadside assistance. Roadside Assistance is an important part of the American landscape, it’s been around since 1915 when a fledgling car club called AAA saw the opportunity that existed and introduced a service to assist stranded motorists.

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Everyday AAA alone receives more than 29 million calls per year for roadside assistance. And although they’re the largest, there are dozens of other companies providing the same type of service in the United States today.

 

People Hate Being Stranded

It’s easy to understand why it’s such big business, people hate to be stranded and Roadside Assistance saves people time, trouble, and money. They love the peace of mind that comes from having an 800 number in their wallet, and knowing that one call will bring much-needed help wherever they travel.

When you come to understand and appreciate this relationship, and partner with the top Insurance providers, you’ll be regarded as a valuable asset and business partner. And right now is a great time to get involved.

Opportunities Abound

Although roadside assistance has been around for 100 years, the majority of motorists have not yet taken advantage of all that Insurance Companies have to offer. On US roads today, there are over 250 million vehicles with an average age approaching 12 years.

Couple that with the fact that there are over 170 million cell phone users in the US and you can begin to see the opportunities that exist? It’s the perfect recipe, with the result being success for your towing business.

 

Here’s Why Partnering With Top Insurance Companies Works

Americans have always been self-reliant, picking themselves up by their bootstraps. And when they can’t do something…when they don’t have the ability or expertise, they get a friend or relative to help. Yes that’s the way it’s been for a long time but things are beginning to change.

You’ve seen it…maybe you do it yourself. Everyday there are millions of people at restaurants, on trains, waiting for the bus…totally ignoring each other. They’ve all got their heads down looking at their phone or personal device, oblivious to the world around them. We’re not interacting with one another like we used to. This means real-world relationships are taking a back-seat.

 

But what’s that got to do with the towing business?

Instead of relying on friends and family when stranded, motorists are quickly becoming accustomed to choosing another sort of self-reliance. They’ve become irreversibly attached to the roadside assistance that can easily be summoned with their smart phones.

And as this trend increases, and more people become addicted to calling roadside assistance… Inevitably there will be more need for the services of towing companies. And, as with any market, when demand is high and supply is low (not enough tow trucks), the rates for your services will increase.

 

Now is the time to take advantage of this perfect storm.

You could do what many other towing companies do…COMPLAIN. I’ve done it BUT IT GOT ME NOWHERE.

You could be like a jealous lover who despises the relationship motorists have with their Roadside Assistance, believing there’s no need for a middle-man to come in-between you and “your” customer.

But if you do that, you risk being viewed, by both the Insurance Company and the motorist, as a liability. And if that attitude persists, they’ll quickly look to replace you. So embrace the fact that motorists love Roadside Assistance and take advantage of the tsunami of calls that are on the way. And let the other guys complain.

How Roadside Assistance works and how can you partner with top insurance companies to make a ton of money in the towing business?

 

How Insurance Companies and The “Roadside Assistance” Thing Works

In every transaction involving roadside assistance there are a minimum of three participants (although there can be as many as four or five). The three main players are the insurance company, the motorist, and the towing company.

To understand the nature of these transactions, and so you’ll know how to properly work with insurance companies, I’ll explain how each partner benefits from the relationship.

The Insurance Company:

Along with other products, Insurance Companies sell roadside assistance insurance to their customers. Their promise is that, should the motorist become stranded or in need of other services included in their roadside assistance package, they’ll find the closest tow truck to help them out.

Of course most Insurance Companies don’t own their own tow trucks. Instead, they contract with towing companies all over the country, large and small, to respond when a motorist has a claim. And generally, these Insurance Companies make their money by one or more of these three methods.

1. Direct pay

With a Direct Pay agreement, an Insurance Company charges the motorist receiving the service a direct fee. Here’s how it works. The motorist calls the Insurance Company when they need roadside assistance, the Insurance Company takes all of the information and contacts a local towing company, which does the work.

The motorist pays the Insurance Company an agreed-upon amount and the Insurance Company pays the towing company their fee. This is usually less than what the motorist has paid the Insurance Company. The Insurance Company then keeps the difference as their fee for providing the service.

2. Annual or monthly premium

The motorist pays an annual or monthly premium to the Insurance Company for the service. The Insurance Company has many policyholders who pay their premiums, and they only pay out only when service is requested and authorized, per the terms of the agreement. In essence, with this option the Insurance Company is playing a sophisticated numbers game using actuarial science and psychology to ensure that they don’t lose.

3. Fourth-party contract

The Insurance Company contracts with a company like a car manufacturer, another insurance company, or a wireless phone provider (fourth party), who then sells the Insurance Company’s services to their customers, or provides those services at no extra charge, as a perk, to their customers. In this scenario the Insurance Company is competing with others in their industry. In order to win, they promise the highest-quality service at the lowest rates while still operating at a profit. Sometimes this method can result in rates for towers that are less than desirable.

Each Insurance company has their own business model and has worked with towers to hone it and make it work. But even though most Insurance Companies understand and value the relationship they have with their towing partners you must be careful when deciding what companies to work with. Most are reasonable and value the service that tow truck operators provide and view what they do as an indispensable part of their business but others are not so easy to get along with.

Of course there are other types of relationships in the Insurance Company world that I haven’t covered here, but the most important point is that Insurance Companies are in business to make money and if you can help them do that they’ll want to partner with you.

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The Motorist:

The motorist is the person in need of service. Traveling locally or cross-country, motorists can and do experience any number of difficulties, everything from flat tires to accidents. They use the services of an Insurance company for speed, economy, and peace of mind. Motorists’ expectations fall into three main categories.

1. Quick and easy service

Some motorists believe that finding a tow truck when they need one will be difficult, so they purchase roadside assistance. They do this in the hope that the Insurance Company’s connections will enable them to find an available towing company and expedite service.

2. A belief that towing companies will gouge them

For decades Insurance Companies have perpetuated the fear that towing companies will take advantage of stranded motorists. As a result, motorists fear that, without their Insurance Company’s involvement, they will be charged outrageous rates.

3. Fear of being stranded

Having Roadside Assistance assures motorists that they’ll find a towing company to help, no matter how remote the location.

The towing company:

Towing companies provide towing and related services. Upon receiving a call from a Roadside Assistance dispatcher, towers are usually asked to give an estimated time of arrival when they can respond to a motorists’ needs. Towers are compensated for their time through three main methods.

1. Contracts

This is an Insurance Company’s preferred method. They ask for a certain amount of free miles plus a standard hook, and a service-call rate that can be below the tower’s standard rates. A tower who signs this type of contract might be inclined to believe it includes entitlement to an exclusive area, and that the company will send all their customers his way if he lowers his rates and contracts with them. This isn’t always the case. Many times the Insurance Company will sign with multiple towers in the same area and choose arbitrarily or give preference to those with the lowest rates.

1. Primary or preferred provider

Some Roadside Assistance Companies will offer what’s called primary, or preferred-provider, status. This means that the contracted tower will be their first, and sometimes only, contracted provider in the area. But to attain this highly coveted status he’ll be asked to come off his rates. In other words, as a condition of being preferred or primary, he’ll be required to accept less money for each call. The reason many towers like and agree to this arrangement is the belief that the volume of calls will more than make up any potential loss from the lowering of rates.

2. Call-up, no contract

In this scenario the Roadside Assistance Company has a motorist who needs service, but there’s no contracted tower in the area, or there’s none available at that time. With no contracted provider available, the Roadside Assistance Company consults their list of known towers in the area (a list that can be populated by towers who’ve signed up but are not contracted), or the Roadside Assistance Company will perform an on-line search, if their primary list produces no results. When they find a tower to accept the call, the Roadside Assistance Company will pay him at his rates, usually with a credit card.

Now that you know about the opportunities that exist and how Roadside Assistance works the next step is to go to Guide To Partnering With Top Insurance Companies, where you’ll find a comprehensive list of the top Insurance companies providing Roadside Assistance and a free guide that shows you the 3 strategies of partnering with them.

About the Author:

Don G. Archer is the former owner of a 12 truck, 20 employee towing business. He now spends his time helping others build and start successful towing businesses around the country. Don is a multi-published author, educator, and speaker and is known as the tow-evangelist, www. thetowacademy.com Want to learn more? Email him direct at don@thetowacedemy.com

21 Comments

  1. TowBilly August 7, 2015 at 3:41 pm - Reply

    Where can I get insurance? I’m in the towing business now but haven’t worked for insurance companies too much. Mainly paid with a credit card. I called and they all want different kinds of insurance, different than what my automobile insurance company offers.
    Thanks

    • Don G Archer August 7, 2015 at 3:52 pm - Reply

      You’ll want to find a carrier that specializes in insurance for towing companies. You shouldn’t have too much of a hard time if you only have one or two trucks. You’ll need: General Liability, Automobile Liability, Workers Compensation (check your state requirements), On hook/Cargo and garagekeepers.

      • Shawn givens May 12, 2017 at 2:20 am - Reply

        Hi don,

        I’m looking to start my own business but don’t have a tow truck yet. How can I get contracted for roadside assistance just for lockouts, tire changes, and helping customers who’ve ran out of gas?

  2. acbow245 August 11, 2015 at 5:38 pm - Reply

    If you don’t have a contract with them then there’s no guarantee that they’ll call you. They could just call anyone outside the area. And I heard that if you’re contracted with some of the motor clubs then they will refuse to pay you with a credit card even if the call is out of your area. It’s like you’re being punished if you’re contracted with them.

    • Don G Archer August 11, 2015 at 5:48 pm - Reply

      It is true that sometimes, when calling for service out of your area, a few of the motor clubs/insurance companies will refuse to offer a credit card for payment if you’re a contracted provider. As far as I know there’s nothing set in stone there but you should be aware that it may happen. Be sure to read the agreement before signing.

  3. Donnie Knight September 9, 2016 at 2:48 pm - Reply

    I do everything accept tow

    • Steve November 11, 2016 at 9:48 pm - Reply

      Thats what I was thinking about doing…everyting but tow. Hows that working out?

  4. Jonathan Williams December 8, 2016 at 4:15 pm - Reply

    Hello I’m interested in working as s contractor doing road side assistance as a contractor how do I get started I’m in the Baltimore MD Area thank you very much.

    • Don G Archer December 9, 2016 at 9:23 am - Reply

      Start by going here and reading this post Then if you need help give me a call or shoot me an email. Thanks

    • Kyle March 3, 2017 at 3:47 am - Reply

      If you don’t have any experience I would recommend working as a subcontractor for a local company. Inman’s auto rescue is where alot of people get their start myself included and then go on to starting their own business. They are a nationwide Company and will keep you super busy although they don’t pay as much as other companies you get more work as they are a preferred provider in most areas. They will work you and your car into the ground but if your willing to put up with it for a grand or so a week you’ll definitely get a lot of experience quick. Feel free to ask me any questions you want. I worked for a year before I had enough and started my own business.

      • Don G Archer March 3, 2017 at 7:44 am - Reply

        Thanks for commenting Kyle. From what I’ve heard from others who’ve worked for Auto Rescue is that they only pay around $12 per call. Imagine traveling 10 miles in rush-hour traffic to change a tire, and it’s one of those stubborn tire changes where you spend 20 minutes just to retrieve the spare. That’s a lot of time and effort for $12.

  5. Brandon March 16, 2017 at 4:12 pm - Reply

    I have my business license in Roadside Service and ready to go. I have a felony and still able to get my towing card, so what do I need to do to get excepted?

    • Don G Archer March 18, 2017 at 9:19 am - Reply

      Brandon
      I’m going to assume your question is regarding being accepted by the motor clubs. Depending upon variables like the type of felony and how long ago you were completely discharged, you may or may not be accepted by the clubs. To learn whether or not you can contract with any of them, you must apply. But before you do that check with your state Board of Labor and your city Chamber of Commerce to learn if there are any programs that might help you transition into this new role. Recidivism costs governments money so I’m sure there’s some type of program in place to decrease occurrences. Thanks and good luck.

  6. Floyd March 28, 2017 at 12:44 pm - Reply

    Hello I’m starting a roadside assistance business for Semi trucks in Chicago area I’m not sure what insurance I need and what is the general coverage for me to get on there breakdown call list I keep reading about insurance certificates that they will need but when I call insurance companies they have no idea
    Should I be looking under towing insurance for roadside​ assistances
    Thanks

    • Don G Archer March 30, 2017 at 6:52 pm - Reply

      Floyd
      Insurance for the towing business is not the same as consumer insurance for an automobile, as I’m sure you are aware by now. If you’re doing straight roadside assistance without hooking to the vehicle and moving it you’re going to need liability for sure. The limits are going to depend on many factors, state minimums, your safety procedures, experience as a roadside technician, etc. To get the best answer to your question, I would suggest that you call an insurance agent who works primarily in the towing industry. The one I suggest is Weiss Insurance out of St. Louis, Cindy Horn knows her stuff. You can call her at 636-787-7777. Thanks and good luck

  7. chris harris March 30, 2017 at 9:54 am - Reply

    Hey hows it going i was reading above and I have a question just got an offer to be a service provider for my first insurance company I currently have 2 rollbacks right now ,just wondering what the going rate insurance companies will pay being contracted with them for hook fee and $ mileage unloaded and $ loaded I don’t want to agree to a rate and screw myself by doing the tow for too cheap a lot less then retail value then i would get from a regular customer I know it has to be cheaper than usual because they will be giving me more work im just wondering how much cheaper? The rep from the insurance company said there’s room to negotiate but i’m not sure how much. I do tow for a few different insurance companies now but i’m not contracted with them so i get normal rates when i work for them which is nice but could use the extra work right now

  8. Jordan April 19, 2017 at 7:24 pm - Reply

    I wanna start a roadside company how do I go about getting it started not gonna tow right away gotta save up for a truck just wanna do light and medium duty lockouts jumps fuel and tires I have been with a company going on 7 years so I have plenty experience just ready to do my own thing now

  9. Marquita Wilson April 21, 2017 at 12:20 pm - Reply

    Good morning Mr.Archer
    Hello my name is Marquita I’m inquiring information for my Husband, he is really trying to get his foot in the door of becoming a self contracted road side assistant/ mobile mechanic server, if its not to much to ask could you please inform me on the steps to share with him on how to get start on his future Investment…

  10. Justin Agudio April 26, 2017 at 3:20 am - Reply

    Where can i get a list of companys too partner with?

  11. Johnny Boodhoo May 5, 2017 at 12:59 am - Reply

    Hey Don, im interested in doing replacement wheels on vehicles that has been vandalized.
    How do I go about getting started.?
    Any ideas?
    Ty.

  12. Will May 21, 2017 at 6:16 pm - Reply

    Any of you on here needing a Roadside Service tech in the Beaumont TX or surrounding areas? Looking to join networks and offering services in my local areas as needed, part-time. Can you suggest anything else that can help me get customers in the area as an Independent provider? Thanks

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