Should I have car insurance towing and labor coverage?
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UPDATED: Oct 18, 2021
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When you’re purchasing a policy for a new or used vehicle, there is certain coverage that will be required by your state. But there is also optional coverage you can add and remove at your discretion. One of those options is towing and labor, a type of insurance coverage that is increasingly becoming more widely used across the United States.
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As the Pennsylvania Insurance Department so adeptly points out, towing and labor coverage on your policy covers the cost of having a disabled vehicle towed or restored to running condition so the driver can at least get home or to the garage. Typically this type of insurance is utilized for things like flat tires, dead batteries, and so on. Sometimes it’s known as roadside assistance protection. In years past, many drivers would buy a separate roadside service policy from auto clubs like AAA. Now virtually every auto insurer offers roadside service as a cheap add-on. You could get roadside assistance for just a few dollars per renewal period.
How do age and condition of your vehicle affect roadside service?
IBIS World, a well-known company in the business of market research, estimates the auto towing and roadside assistance industry is worth some $5 billion annually. They further estimate the industry sees an average annual growth of about 2.7%. Such growth indicates an expectation that both prices and profit will go up from year to year, which, inevitably, also dictates the average consumer will pay more for search services.
The likelihood of your vehicle needing towing services while it’s still so new is relatively low. But a good roadside service add-on can provide peace of mind for just a few dollars. Everybody forgets to fill up their gas tank or they get a flat tire every now and again. Fuel delivery, towing, and other services are available no matter the age or condition of your vehicle.
On the other hand, once a vehicle reaches the 50,000 to 60,000 mile range, the likelihood for breakdowns begins to increase. By the time you turn the odometer on 100,000 miles, having towing and labor coverage becomes almost a necessity. Fuel delivery is an extra perk, but you might worry about things like jumpstarting your battery, replacing a flat tire, towing your car to a shop, and more. Depending on a plan, you may get basic service or more extensive labor coverage to get you back on the road without stopping at the nearest shop.
Determining whether towing and labor insurance would benefit you really is a question of simple math. Add up all of the towing and labor expenses you paid out of pocket over last 12 months and compare it to what your insurance company would charge you for the extra coverage. Also compare the number of times you had to call for a tow versus how many times your insurance coverage could be used. Some insurance companies limit the tows to three or four times annually. An auto insurance company may add just a few dollars every 6 months to get access to a network. Generally speaking, they charge around $50-$75 per tow or service on this network. You can compare this to the usual prices you’d pay for lockout service, flat service, etc. But generally speaking, the cost of access is not significant.
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Is it worth it to sign up with an automobile club?
If you belong to an automobile club it’s quite likely that towing and labor is part of the membership privileges you pay for. For example, AAA is one of the most widely recognized names among automobile clubs in the United States and Canada. One of the things they are most known for is their roadside assistance program that provides towing and labor for disabled vehicles as part of membership. Auto clubs like AAA typically have various levels of membership, so you’d have to check with your club to see if towing and labor is included at your level. Keep in mind, they tend to have a wide range of availability. Some clubs have more service providers depending on where you are. These emergency roadside services cost more, and you may or may not get more than you would with an auto insurance policy add-on.
If you’re considering joining an automobile club just for the roadside assistance benefit, you should probably check with your car insurance company first. It may not be worth it if they are willing to give you a better rate than what you’d pay for club membership.
On the other hand, some automobile clubs offer a lot more with a membership that simply roadside assistance. You can avail yourself of travel discounts, travel planning services, concierge services, and more. Some even offer discounts on auto insurance through specific insurance companies. Because of the higher cost, these are generally not suited to brand new or other low-risk cars.
Does towing service come with collision and comprehensive coverage?
One last thing to consider regarding towing and labor is pointed out on the Pennsylvania Insurance Department website. They state that towing and labor is often carried by those who also have collision and comprehensive coverage as well. What they fail to mention is that many insurance companies include the extra coverage as part of collision and comprehensive.
As the thinking goes, a vehicle involved in accident is probably going to need to be towed anyway, so it’s best to include it across-the-board.
When it is part of your comprehensive and collision coverage, you normally won’t see a financial breakdown allowing you to find out exactly how much paying for it. If you’re concerned that you might be paying too much for towing and labor you can always ask a representative exactly how much it costs and if it’s possible to get comprehensive and collision without having it included.
Some plans (for classic cars) are designed to only offer liability, comprehensive, and roadside service. They’re designed for cars that aren’t on the road on an everyday basis, and they may be more prone to breakdowns due to age. Emergency road services are a natural perk an insurance provider would want to add to attract these specific customers.
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