Ok so you’re thinking about becoming a contracted roadside assistance provider for some of the insurance companies. If that’s the case, most likely you come from one of 2 camps. You’re either already in the towing business, or you’ve recently started thinking about getting involved. And like many people in your position, you’re reaching for what you perceive to be the lowest-hanging fruit.
Who can blame you? You want to get connected and partner with the very people who are already connected with those who need your services. But before you sign that dotted line and become a contractor, there are a few things you need to be aware of.
Should you become a contracted roadside assistance provider for the insurance companies?
Below is a short list of things you should consider before signing up as a roadside assistance provider. Although some of what is contained here is critical of many of the practices of the insurance companies, this article was not put together as a means to vent or to bash the companies and their relationships with roadside assistance providers—that would be doing YOU a disservice.
With that being said, as you cruise through this list you may notice our distaste for the way many tow company owners are treated by some of the insurance companies. It is not our intent here to sway you against choosing to work for these companies, they do have their place and we’ll talk about the various methods of leveraging these relationships. Rather, our intent is to give you a look at how the insurance companies operate, and more importantly provide you with our philosophy on maximizing profits, how a new or existing business owner should approach the business of towing. So, let’s get started.
#1: Working as a contracted roadside assistance provider for the insurance companies means accepting below-market rates.
Of course, this one had to be first on the list. Most Insurance companies pay contracted roadside assistance providers less, much less, than what a customer would pay if they called you direct.
Insurance companies must make a profit and they do so by paying out less in claims than what they receive in premiums. When an insurance company calls a roadside assistance provider to provide service to one of their customers, that’s considered a claim. They’re paying the roadside assistance provider out of a pool that’s been designated for these type of, what they consider to be – losses. To minimize losses, insurance companies must seek to contract with service providers to provide the necessary services for the least amount of money as possible.
If you’re someone who hasn’t yet experienced the joys of working with the insurance companies as a contracted roadside assistance provider, you might be willing to accept less money. You might think, “Yeah, the rates may be low, but there’s going to be a lot of volumes, which will more than make up for the low rates.”
Please don’t take this the wrong way, but when we thought of you thinking that thought, all of us here in the office experienced a collective sigh.
Now we could go on and on about the reasons why you should not be putting all your eggs in a dry-rotted basket or running the wheels off your tow truck, or we could even provide anecdote after anecdote of business owners who have learned some hard lessons due to their trust in some of the insurance companies, but instead we settled on a story about a plant.
That plant is the Pitcher Plant. It’s somewhat similar to the Venus flytrap in that it’s carnivorous. It eats mostly flies and other small insects. But that’s where the similarities stop.
The Venus flytrap operates like a bear trap. Once the fly steps into its wide open “mouth,” the plant clamps shut, imprisoning and then devouring the fly. The Pitcher Plant, however, is much more calculating and insidious in how it operates. It’s shaped like a pitcher, hence the name, and the inside is covered with a sticky fluid that flies, and other insects are attracted to.
Here’s how it works.
A fly will land on the top of the Pitcher Plant and take a step inside just to get a taste, and at first, he’ll be ok. The walls are a little slippery sure, but he’s got wings. He can still get away at any time. And even though he can see the bodies of other flies floating in the pool below, he believes that could never happen to him, and so he continues to gorge himself on the delicious treat.
Feeling confident, the fly then travels further and further into the plant, eating more and more of the delicious contents. He’s so into the free meal that he doesn’t even notice that the inside of the plant is also coated with millions of tiny hairs, all pointing downward and that the slopes of the plant’s walls are now completely vertical.
Once he’s completely satisfied and full, and twice his normal weight, he notices that he’s completely covered in the sticky goo and starts to feel like he might not be able to free himself. And, struggle as he might, he finally succumbs to fatigue and falls into the pool below to be slowly digested like all the poor devils before him.
Yeah, in our opinion, contracting with some of the motor clubs/insurance companies is kind of like that.
The problem with many new towers is that they don’t know the true costs associated with the operation of a towing business. Many believe that if there’s money left over after fuel, well, that’s considered profit. Eventually, though, if they continue that line of thinking, many end up like the poor fly in the Pitcher Plant.
They buy a second and a third truck to accommodate the insurance companies, but when the reality of…truck repairs coupled with payroll expenses, damages, increased insurance premiums, and the inability to put money back for their next truck comes into play…they panic. Margins are tight, and bills go unpaid, but rather than moving away from working for the insurance companies, which in their minds would mean admitting defeat, they double down and take on more of the same…because that has to be the answer. And…because the insurance companies have become their bread-and-butter, and since that’s all they know, they become trapped.
Don’t fall for that trap.
#2: Some insurance companies will try to pay contracted providers less than was agreed
For many insurance companies, the process works like this. You receive a call from dispatch, and they provide you with the necessary details (hopefully) surrounding the call, including the customer’s coverage limits and a purchase order number. From there, you perform the work and submit your invoice through their online portal.
Depending upon the insurance company you’re contracted with, you can then expect to receive your check within 30 to 45 days. Payment, in many cases, will come in the form of an itemized check, which will include the purchase order number and the amount of money you paid for that call.
The problem is, once you receive that check, many times, what you see on the stub is a line that says, “Adjusted to your rates-Audit,” or “Missed Priority ETA,” and a dollar amount that is less than you expected.
You’ve done your part, provided the service requested and were expecting to be compensated with the agreed-upon rates. But if you don’t follow every edict of the contract you’ve signed, the insurance company you’re working for can snatch your money legally.
If you sign a contract with the insurance companies, you are agreeing to the terms and conditions of that contract, be sure to read and understand every line, and then use the portal to dispute any discrepancies.
#3: The information provided when a call is dispatched is not always accurate.
As alluded to previously, the information provided by insurance company dispatchers is not always accurate. So, what’s the big deal? People make mistakes. Right?
The big deal is that mistakes can cost you money.
Whether the mistake is an incorrect breakdown location, incorrect location of the keys and the customer, or simply the reason for the tow, mistakes cost towers time and money. Although these can be frustrating, the most egregious “mistakes” occur when contracted service providers are told that the customer is “covered in full” only to find out weeks later that they weren’t completely covered, and that’s why your check was adjusted downward. Or being promised that you’ll be paid dead-head miles or be reimbursed for winching, only to find out that payment for those items was not included on your check because the dispatcher failed to include any mention of it in her notes? Ouch…That can really sting.
Most insurance company roadside assistance dispatchers are compensated for their time in 2 ways. They’re paid an hourly wage, plus many are offered bonuses for clearing large numbers of calls throughout their shifts. Unfortunately, what this can amount to is doing whatever a dispatcher deems necessary to get a contracted roadside assistance provider to take a call. Including, but not limited to providing incorrect information. And even when compensation isn’t the main focus desperation can kick in.
Many tow company owners have been burnt by insurance companies numerous times, this makes the dispatcher’s job of finding help for a stranded motorist difficult. So difficult in fact that some have resorted to whatever means necessary to complete a call, including providing incorrect information, and leaving out the required documentation.
Most insurance companies who provide roadside assistance do have a vehicle for disputing these discrepancies though. Their online portal allows you to state your case and explain why you believe you were underpaid. But if there are no notes on the call indicating that the dispatcher agreed to pay the extras, you may have no other recourse. That is unless you can talk to the field rep assigned to your account, and you can convincingly explain what happened. (good luck getting a returned call)
#4: Field Representatives do not always respond in a timely manner.
Tow company owners are always putting out fires. The phone rings and you send a driver in one direction for an undetermined amount of time, it rings again and it’s law-enforcement, needing you for a recovery, the next time it’s a damage claim. There’s always something going on, and when you need a matter addressed, like an incorrectly paid insurance company invoice, you want to deal with it one time and be done. This means you need access to the people who can make that happen.
Most insurance company dispatchers don’t have the power to fix underpaid invoices. However, your field rep may have the authority to do so. The problem lies in the timeliness of their response.
Rather than going on about the insurance companies who are the worst in this respect, we’ll provide you with our opinion on what insurance companies/motor clubs have the best field reps.
AAA is the biggest motor club out there, and even though what they pay their contractors leaves something to be desired, they do provide the highest level of support. A few of the positives include: Monthly field-rep visits, Easy access by phone, and returned emails. Another perc about AAA is the fact that their dispatchers are, in our experience, available. You are provided the ability to talk to the same dispatcher you spoke to previously, the one who’s familiar with the call. And…here’s the big one, they have the ability to make, some, minor changes to a call before it’s sent-on to bookkeeping.
Geico is another company that understands the value of keeping in contact with its contractors. Although their field-reps don’t make as many visits as the AAA reps, in our experience, they are easily accessible when you need them. And their dispatchers are pleasant, many of them have a Southern accent, they’re based in Georgia.
Just know that mistakes and “omissions” will happen. So, if you’re going to be a contracted service provider for any of the insurance companies you need to ensure you have access to the people who can make the necessary adjustments.
So, what do you think? Should you become a contracted roadside assistance provider for the insurance companies?
How to Make Working with Insurance Companies Work for Your Business.
The short list above is not all-inclusive. There are many more things to consider before becoming a contracted service provider for the clubs. But rather than go on about what we see are problems inside the corporate headquarters of these companies, we’d like to turn your attention to how to leverage these relationships.
#1: Leverage Insurance Company Customers by Getting Them to Leave Reviews
Google uses two basic means to determine what towing companies show up when an online search for your services is performed. Those are location and reputation. One measure of a company’s reputation is the quantity and quality of its online reviews.
If you provide valuable service and are courteous to the insurance companies’ members, you have every right to ask for a review. The problem is most customers will say that they’ll leave you a review, but if left to their own devices, 95% of these people never do.
Providing the customer with a business card with a link to your online review portal is, in most instances, fruitless. Customers will forget, not understand the process, or simply say they don’t have enough time.
Your best bet is to get that review when you’re face-to-face with the customer. Take a look at how this review tool works. You simply ask a question like, “If I’ve done a good job for you today, will you please leave me a review?” If the customer agrees to do so, you just tap an app-like bookmark on the home screen of your smartphone and then text it as a link to the customer’s phone. This allows them to provide you with a review/testimonial before they even get out of your truck.
Positive reviews are like money in the bank. Although there are many other things to consider when upgrading how Google views your reputation online, reviews are a step in the right direction. So, if you’re going to be a contracted service provider for some of the insurance companies, you might as well take advantage of this opportunity.
#2 Turn Insurance Company Customers into Your Customers
As stated earlier, insurance companies need to make a profit to stay in business. And one way they do this is by looking for the contracted service provider who will do the work for the least amount of money. This means that many times, customers are required to wait while a dispatcher conducts a search.
Sometimes, it takes more than an hour before a service provider is finally found and dispatched. And, depending on how far they must travel and how backed up they are, it may take another hour before a tow truck finally arrives. This can be very frustrating for the customer as they don’t have a clear understanding of the process. And many times, they tend to lash-out at the person who’s there to help, the tow truck operator.
If you can empathize with the customer’s position and turn their frustration into “relief that help has finally arrived,” and they are from the area, you may be able to turn them into your customer. Rather than allowing a customer’s anger to spark your own, hand them a bottle of water and a business card. Help them understand the situation and tell them that if they’d prefer not to wait so long next time, they can just call you direct.
Depending upon the relationship and agreement they have with their insurance company, the customer can call your company direct, pay for your services, and submit your invoice to their insurance company for reimbursement.
It’s that simple. Turn what could be a measly $45 call, that may or may not conclude with a negative online review about your business, into a customer for life.
#3 Leverage Insurance Company Customers for Better Relationships with Repair Shops
Many times, insurance company customers do not reside within the area in which they find themselves needing your services. And if they are experiencing mechanical issues their car may need to go to a repair-shop. Depending upon the information provided to the insurance company dispatcher and the dispatcher’s ability to determine their needs, the motorist in need of assistance may or may not have been provided with a repair facility as the tow destination. Of course, sometimes this information isn’t available, or a dispatcher might choose a repair facility that’s out-of-the-way, or simply, no longer in business.
Regardless of the circumstances, you as the tow truck operator can use instances like this as an opportunity to provide assistance to the motorist, while bolstering relationships with your local repair-shops. Of course, you will want to be selective and only suggest repair shops that provide exemplary service.
Let’s say for example that you are dispatched to change a customer’s flat tire, but once you arrive you learn that, yes, the tire’s flat but the car also has a broken ball-joint. Your first inclination might be to call the insurance company and complain, but hold on. Rather than complaining about the situation, capitalize on the opportunity to help.
If you are a good tow company owner then your phone is already filled with the names and numbers of all the quality local repair shops. Pull out your phone and call the closest repair shop that might be able to get the customer in. Introduce yourself and explain what you believe to be the issue (remember you’re not the mechanic, defer to the experts) then ask if they have time to do the work. Most will say yes.
The next step is to explain what’s going on with the customer and that, for the tow to be covered to this new destination, it will either need to be approved by the insurance company or the customer will be required to pay any overages. Then, if necessary, place the call to the insurance company and complete the tow.
If done properly, this move is a win/win/win, all the way around. The customer is happy that you’ve taken the initiative, (you might even be able to hit them up for a review) the repair-shop is thankful for the referral, and…hopefully, you’ve been able to build a better relationship with the repair-shop. Which, with the law of reciprocity kicking in at some point, may lead to more tows from that repair-shop.
One word of caution here, don’t lean to heavily on one or two repair-shops. Spread the love around because if you don’t, you risk alienating the repair-shops you don’t frequent, not good for business.
Working as a Non-Contracted Service Provider for the Insurance Companies
Instances will arise when an insurance company must go outside their database of contracted service providers in order to get service to one of their members. The reasons for this vary, and may include the fact that there are no contracted service providers in a given area, no contracted providers are willing to do the work for the pittance the insurance company is willing to pay, or simply, that they are all too busy and are not able to provide the dispatcher with an acceptable ETA. When this happens, the dispatcher must find a non-contracted service provider to help. This is called going “outside the network,” or “out-of-network.”
To find a service provider for one of these out-of-network calls an insurance company dispatcher uses various methods. They might access a list of previously contracted service providers. And if it was an amicable separation, and you’re on that list, you might get the call. Another way is to consult The Oracle, Google, where the more visible you are there the higher your chances are of receiving the call.
If you’ve been in the towing business for any time and you’re not currently contracted with the clubs, you’ve probably received these calls many times. The advantage of being a non-contracted service provider and receiving one of these calls is that, if you get the call, the insurance company will pay your rates. You don’t have to accept the low-low rates that a contracted service provider would receive.
How to Maximize Profits for Your Towing Business
Understanding the way insurance companies treat contracted and non-contracted service providers, and the various methods of leveraging these relationships can help your business. But if you want to maximize profits and stop spinning your wheels you need to be familiar with how money flows into your business, and which revenue streams are the most profitable.
There are basically four ways in which a stranded motorist finds the services of a towing company.
- Law Enforcement
- Insurance Companies/Motor Clubs
- Referrals (includes repair-shops & word-of-mouth)
- Google Online Search
Think of it as a table with 4 legs, with your business sitting on top of the table. Which do you think is the most profitable?
Most tow company owners would answer, “Law Enforcement,” because, barring any third-party dispatching company’s intrusion, it’s still the most lucrative in terms of the rates per tow. But, from our experience with the hundreds of towing companies we’ve helped over the last seven years, we know that the best and most profitable means of attracting new customers is through an optimized pay per click Google Ad campaign.
Most motorists are unprepared when they need a tow truck, as they only require your services maybe…once every 4 to 5 years. This means that even if they do have roadside assistance as part of their automobile insurance, they might not know about it. And even if they do, they might not want to waste the time learning how to use it. But one thing that they do have is a cell phone.
A 2017 Pew Research Center report reveals that 95% of the people in the United States have a cell phone, which means they can search for the services of a towing company.
This means that if you’re not online, on Google’s first page, you’re invisible.
Whether you decide to be a contracted or non-contracted service provider for the insurance companies is up to you. It’s a business decision only you can make. Another even more valuable thing to consider is your online presence. How well your business is showing up organically. Search Engine Optimization is important for the longevity of your business and if you’re approaching it with a shot-gun approach, or just throwing something up to see if it sticks, you’re wasting your time. Being consistently present on Google’s front page is attainable, but it’s not a sprint, it’s a marathon and you must stay committed for it to work..
This is very valuable information. My husband and I are starting our tow services soon. Thank you for sharing your knowledge with us “newbies”.
To grow bigger
Ty
YankAway towing
Where is a good tow truck dealer in Missouri?
Try Purpose Wrecker
How can I join the towing company?
What an awesome and inspiring lead. Thank you so much.
The words in this article come from a very informed person in the industry. I’ve never met you, but your information is spot on. Appreciated reading what I already know. It’s nice to know I’m not alone in my thinking. Keep on informing sir.
As a side note, in my perfect dream world, we as towers should unite and not do one insurance roadside call ever. We are the ones who could end this penny paying side of our business. We could do this. I’m not saying to put aside our differences and sing kumbaya together. We need to organize for the sake of profit both for the owner and driver. I believe this will eventually happen based on pure economic realities. Unfortunately, it won’t be us as a group but out of necessity for survival. This way will take much longer though.
I have dropped AAA and a multitude of other roadside assistance companies over the last four years. Guess what happened? They still call me. Not as much but it only takes a couple of calls to equal the profit of a multitude of low paying ones. They aren’t going to go out there and do their own calls. If you’re good, they can’t afford not having you in their stable. Get paid what you’re worth. Anyone who has a good grasp of this industry and is professional is only doing themselves a disservice by doing work for roadside companies at a contracted rate.
One other point that you touched on briefly. If you are doing, say 600 calls a month for roadside companies at their rate. The amount of trucks it takes to do that in a timely matter keeps your profit margin low. Once you blow a trans or a turbo or throw a set of tires on a couple of trucks, your profit margin turns into a loss. Maintenance is a killer, and you can’t afford it at welfare rates.
Thanks again for your insight.
Tom, Thanks for the accolades, I’m glad to see that you have successfully shed your business of certain parasites, good for you. Life is too short to work for the pittance they offer, and I agree, we all need to wake up and choose only to work for the people and businesses who value the services we provide.
All across the country, there are thousands of towing company owners and tow truck operators who are real professionals, who deserve the same appreciation as the firefighters and police officers they work side-by-side with every day. Think of the countless motorist lives these guys and girls have positively impacted over the years. Done so selflessly and with little acknowledgment.
I like your idea of unification, but I’m afraid there will always be wide-eyed individuals, jumping in to work for the clubs. Many so desperate, they’re like an eighth-grade girl who’s immediately smitten when a boy looks her way. Not knowing their numbers, and thinking they’re on the road to riches, in the end, they’ll inevitably opt out. My only hope is that opting out happens well before the clubs, auction houses, 3rd party police dispatching companies, and Cities grind them down until they can’t even afford to buy new tires.
You are 100% right. Until rates begin to rise, existing tow company owners need to head to high-ground. Refuse to accept any less than your actual value. Say to the clubs, “So sorry I can’t make a profit at those rates.” And invest in new customer acquisition strategies.
Thanks, Tom, please comment more on other articles, I appreciate you bringing this up once again.
I would like to talk to you more about your post.
Very informative, no complaints, should I work for insurance companies as just roadside assistance, no towing just lock outs, tire changes, jump starts fuel delivery? Would like your opinion.
Noony,
Take the time to read over this post. I believe you’ll find it very helpful. Thanks
How to start a towing company
Lwandile,
Please read on. There are many articles on our website that will help you with our question.
I need info on how to start a tow truck company. If you can assist me it would be appreciated
Basheem,
There are quite a few things to consider before starting a towing company. If you could be a little more detailed in your questioning I’ll try to respond appropriately here. Otherwise, please contact us through the phone number at the top of any page on our website, or consider reading some of the articles on the “Articles” page. Thank you, and let us know if we can help.
I would like to become a member of the emergency assistance,change out tire,jump start and lock out . What do I need to do
James, thanks for the question. The first thing I suggest you do is READ everything on The Tow Academy website. And, if all of that hasn’t provided a satisfactory answer to your question, hop on over to our shop page where you can find some more in-depth information. You can find it here https://thetowacademy.com/towing-company-information-products/
i have 2 flatbed tow truck and i like to become a roadside assistent,towing lock out and jump start,how you guys can help?
Mehran,
Thanks for the comment. To answer your question, first and foremost we provide information that will help you learn about the complex world of towing and roadside assistance. You can find loads of information on our Articles page of http://www.thetowacademy.com. If you need further information that dives a little deeper, I suggest that you check out this page https://thetowacademy.com/towing-company-information-products/
Where we really shine is with our Web Services. To make it in this business, you absolutely must be on Google’s first page. And, we have the knowledge and expertise to get you to the top and keep you there. So, if you’re interested in having us help you with Web Services, call 314-328-9869. Thanks and good luck
I would like to become a member of the emergency assistance
to change flat tires, jump starts, and gas
What do I need to do ?
Anthony,
Thanks for the comment. The answer to your question is the same I provided to Mehran. First and foremost we provide information that will help you learn about the complex world of towing and roadside assistance. You can find loads of information on our Articles page of http://www.thetowacademy.com. If you need further information that dives a little deeper, I suggest that you check out this page https://thetowacademy.com/towing-company-information-products/
Where we really shine is with our Web Services. To make it in this business, you absolutely must be on Google’s first page. And, we have the knowledge and expertise to get you to the top and keep you there. So, if you’re interested in having us help you with Web Services, call 314-328-9869. Thanks and good luck
Hello, what would be the best way to start a roadside service without towing?
Hi what do I need to do to be came a member of emergency roads sides assistance with you guys currently I started with other insurance company . I am providing tow service, jump start.lockout.winch. tire change.fuel delivery.
This is a great idea for roadside and towing companies. Thanks for sharing this.
Thanks, Towing
Id like to do light duty roadside assistance in my own vehicle. How do I get started? There’s a website I saw that says it costs money to start. How do I know if it’s legit? I ran a med duty tow truck for 15 years and was actually a trainer at the time. But I decided it wasn’t worth it. The company was making money but I was barely squeaking by.
Robin,
Thanks for taking the time to comment. You are right, it’s hard to know if the websites out there offering to help you start a roadside assistance business know what they’re talking about. We come from the towing industry and only provide information that’s 100% factual, although at times it’s not what visitors to our site want to hear. For example; providing roadside assistance only, without a tow truck, can force you to do business with the bottom feeders in our industry (Motor clubs) These guys will lie, cheat, and steal and run your wheels off if you give them a chance. That being said, we get the question of “how to start a roadside assistance business” multiple times daily, so, we’ve put together some resources you can take advantage of. If you go to this page on our website you’ll find the available resources. Thanks again and good luck.
Hi Don I am the owner of Monterey and All American Towing I am being dropped by aaa because of their corrupt relationships with other stations, could you please help me with me company allamericantowings@gmail.com
How can I become a roadside assistance provider? I am new and have a flatbed and 2 car carriers.
Deolall,
Thanks for the comment.
If you want to work for the insurance companies, check out this link
Great article Mr. Archer I’m employed as a driver by a local roadside service provider & want to start my own 1 or 2 person roadside business but don’t want to get mixed up with Agero. Is there any way this can be a viable business without going with a big national middle man?
Bob,
Yes, it certainly is possible to start and grow a business without dependency on motor clubs. Regardless of if you are starting a towing business or a roadside assistance business only, marketing is the name of the game. You cannot rely on any ONE source to keep your business afloat, let alone thrive and profit. Investigate the industry and look for the most profitable revenue streams available. In concert with your investigation, determine the best location to start your business, and what’s required (in terms of time and money) to gain market share. If you fail to do any of this and are severely undercapitalized from the get-go, you’re going to have a tough row to hoe. For more information on this check out our resources page. In my book, “How To Start A Towing Company,” I go into these topics in detail. Thanks and good luck.
Nice article! Surely it will help the people who want to come to the insurance business. Nowadays when Corona has disrupted the industries and snatched the jobs, this article will surely give them new hope and opportunity. Thanks for posting.
Best article ever, aaa is crap; they treat their provider like crap and they pay crap! Hope everyone sees them for what they really are one day
How can I become a contractor
Hello
Would like to get more jobs.
Thank you
How to become contractor
How can I get started in the touring business? I live here in Concord North Carolina.