Why is breakdown cover so cheap when insurance is so expensive?

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trotski94@reddit

Breakdown is cheap, but at £10 a year you’re probably with a shite provider Ngl.

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IUsedToLikeLimericks@reddit

Insurance is legally required so profiteering is normal. Breakdown isn't, so it's priced at what it costs.

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DivasDayOff@reddit

Insurance is mandatory. It doesn't have to be attractive or truly competitive. You're forced to go for the least worst offer, which is often only slightly less terrible value than the rest.

Breakdown cover is optional. And if pricing isn't truly competitive and good value for money, people simply won't bother with it.

Also, insurance is potentially covering you for millions in third party liability. All breakdown cover really pays for is their mechanic's time and travel costs. You'll most likely end up paying for any expensive parts, such as a replacement battery.

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FornyHucker22@reddit

doesn’t cost much for barry to drive down with his truck. insurance payouts could be huge

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MidsummerMidnight@reddit

£10 a year? From where? Share the details

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AnonymousTimewaster@reddit (OP)

2Gether Insurance

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Unique-Contract760@reddit

You'll also find the breakdown cover is quite shit for £10, it'll be tow you off the motorway or to a Nearby garage, if they can't fix it roadside.

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EdThePetrolHead@reddit

Your car getting towed home from Cape Wrath? Probably cost £1500 tops.

Driving into a shop front and damaging a grade one listed building that requires the UKs best stonemasons and conservation groups to put right, plus millions in lost trade? Possibly multi million payout. Let alone if you injure / kill people.

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BDbs1@reddit

Causing death is actually (relatively) cheap.

It’s injuries with lifetime care requirements where the real costs are.

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happyanathema@reddit

Yep

Keeps Actuaries in work

https://www.gov.uk/government/publications/ogden-tables-actuarial-compensation-tables-for-injury-and-death#full-publication-update-history

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CarpetPedals@reddit

I heard the brace position on airplanes is to cause death over injury 😵

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qash001@reddit

The fact that you still hold onto that conspiracy theory after thorough debunking is great.

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CarpetPedals@reddit

lol Jesus christ I thought it was only yanks that don’t get sarcasm

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qash001@reddit

Where's the sarcasm though

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PetersMapProject@reddit

An old acquaintance of mine got a £22m lifetime payout for a car crash.

But she is paralysed from the neck down, she's very severely physically disabled.

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jaju123@reddit

Yea there's no amount of money that would make me wanna be paralyzed from the neck down

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THXORY@reddit

Exactly. I used to work for an insurance company and sat in on many court cases. It's the lifetime care stuff that they really dread. Death is (sadly) relatively cheap.

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LegalFreak@reddit

Awards for fatalities are way higher in Scotland than in E&W but yeah, catastrophic injuries still the bigger payout up here, too.

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Spin1441@reddit

Ahhh the Ogden Tables

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mellonians@reddit

I can see the campaign poster now.

Speed kills

So save money on your car insurance and make that extra 10mph count!

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jay19903562@reddit

I imagine £10 a year breakdown cover isn't national coverage. So they get someone to come and try and fix your car or take it to a garage down the road. The cost of that are a fraction of the costs of crashing your car into a bus full of premier league footballers leaving them all permanently disabled and needing lifetime care and the loss of earnings claim.

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old_witness_987@reddit

read the terms, they normally want to bring you to their own garage not home , last time i broke down i told the breakdown insurance to go **** and hired a truck to bring me home . I had d a blowout and the car doesn't have a spare

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Effective-Stretch951@reddit

Breakdown cover £14 a month, last year was £14 a month. Car Insurance £50 a month. Last year car insurance was £218 a month. Make it make sense

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quite_acceptable_man@reddit

Breakdown cover only covers one thing. Insurance covers a multitude of things, including damage to third parties' cars or property.

If you drove you old, cheap car into the side of a Ferrari, your Insurance company would have to foot the bill.

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SpunkSacks@reddit

Or injuring people. You could potentially hurt people so badly they need lifetime care.

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Manatsuu@reddit

Yeah which is why I assume insurance is so expensive for taxi drivers. An uber driver told me the other day he was paying £400 a month or something.

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gyroda@reddit

The other way reasons: taxi drivers have a duty of care to their passengers and they are driving a lot more than the average person.

Plus they have a reputation for aggressive driving, which isn't entirely unearned.

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acupofearlgrey@reddit

The U.K. is unusual such that there is unlimited injury cover to third parties. Hit a motorcyclist in their 20s and they require leg amputation. Could easily be £5m payout.

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172116@reddit

Which is such a good thing. There was someone on the US legal advice sub recently who was saying that they were one of three cars hit by a driver with $25k of insurance cover (which wouldn't have covered their loss, let alone all three), asking whether there was any other way of getting reimbursed.

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gyroda@reddit

I've heard of stories like this and, yeah, it's astounding that they have such low limits. Also, government run organisations like schools can, in some states, have liability capa to "protect taxpayers". These caps can also be per incident, so when a school bus crashed and several kids were killed/injured the parents were looking at splitting the already-low capped amount.

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BladesMan235@reddit

Because your breakdown cover probably has a ton of small prints saying what situations they won’t help you in

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TheAngryBad@reddit

For £10 a year, that's going to be the basic level. ie, if they can't get you going they'll just drag you to the nearest garage and call it good. So even if they do help, it's not like they'll be taking you across the country.

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alinalovescrisps@reddit

You say that but ive used breakdown cover plenty of times over the years and they've never not helped

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Manatsuu@reddit

My wife had a tyre blowout on the m1. A free recovery truck turned up and took her to the nearest service station.

In the meantime I called up the breakdown company, they asked if I had a spare tyre or puncture repair kit and I said I don’t think so (yep I know poor by me) so they said that means they won’t come out as the policy is only valid if I have one of those.

Anyway my wife got to the service station, I asked her to check the petrol station to see if they sell puncture repair kit and they did. So I called breakdown again, said of my mistake we found one in the storage under the boot lol, problem solved.

But yeah that’s the only time they’ve tried to not help me and tbh it was fair enough. Was quite funny in a way though that the puncture repair kit wasn’t needed or used because the tyre was just destroyed, so they took her to a tyre shop where she got a new one.

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omgu8mynewt@reddit

They've not helped me, my car was broken down outside my friends halouse which was less than 1 mile from my house, I couldn't drive it to a garage and they won't move it from home.

A possible solution if anyone is interested: over the phone change your home address to a trusted person's, e.g. mum's, they itbwont be 1 mile away from home address.

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oktimeforplanz@reddit

Or you can not do fraud and instead just add the home cover option. Never saw it add much at all to the cost.

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AnonymousTimewaster@reddit (OP)

The £10 one I got also included home recovery as well

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AnonymousTimewaster@reddit (OP)

Yeah I paid £30 last year and it was brilliant. No issue whatsoever.

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huggy_bear44@reddit

Sure it's £10 for cover, but if you breakdown prepare to wait 6 odd hours for call out with the likes of AA/RAC.

I'm sure whilst you've sat in a dead car for 5 hours into the early hours of a winter morning, you'll be thinking "god this is good value for money"

I'd rather save the money and pay for local recovery if I ever need breakdown help. Yes it would be more expensive, but you'll actually get the service you need when you need it. You pay £10 annually, you've got no recourse for complaints when the service sucks

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Any-Seaworthiness531@reddit

10 years of driving with no claims and your insurance is £500 ?

Expensive tbh

Have you read your breakdown cover ? It’s prob not what you think it is.

Also, a ten year old car isn’t old tbh, unless it’s stupid high mileage, not looked after and you don’t check fluids/do oil changes - then it shouldn’t break down

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debuggingworlds@reddit

I've been driving about 10 years and my insurance is similar (for a cheap 75ps Mazda 2). I think you're a bit out of touch

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Any-Seaworthiness531@reddit

I’m 36, drive a 7 year old 525.

My insurance is £230.

My previous car was 56 plate focus and my insurance was a touch over £100.

Is 36 the new boomer age where we’re out of touch with the super hip and cool 27 year olds ?

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debuggingworlds@reddit

Clearly it is, because you are. 36 and 27 are vastly different in insurance terms.

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Any-Seaworthiness531@reddit

Ok, guess I’m a boomer

Enjoy your youth young whipper snapper

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AnonymousTimewaster@reddit (OP)

Don't forget it depends on where you live as well

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Any-Seaworthiness531@reddit

Ye but 10 years no claims on a 10 year old car at £500 is still very expensive

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themcsame@reddit

I mean, that entirely depends on the car in question...

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Any-Seaworthiness531@reddit

I can’t imagine the car is particularly great when OP is saying £500 is “extremely expensive” ?

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AnonymousTimewaster@reddit (OP)

My insurance doubled when I moved from a quiet village to the centre of Manchester

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Mr_Bumcrest@reddit

They're two different things. Its like asking why a new engine and new brake light cost different things

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bluesam3@reddit

So there are basically two things that determine the cost A of insuring against a thing:

The estimated probability P of that thing happening.
The estimated cost C to the ensurer if that thing does happen.

Broadly speaking, the insurer is just interested in making sure that A > CP (there are exceptions where they'll want a bigger margin depending on the probability, largely where they're insuring small numbers of extremely expensive things that aren't relevant to this discussion).

You're more likely to break down than crash, but crashes are way more expensive to the insurer: they might end up buying you a new car, or buying someone else a new car (which could be a very expensive car if you crash into someone with a fancy car), or rebuilding a building, or paying compensation, or paying for life-long medical care for someone you've seriously injured. Meanwhile there's a hard upper limit on how expensive breakdown cover can get: it's the cost of taking you and your car home on the back of a truck. If that costs, say, £1000, the breakdown insurance company is essentially placing a bet that the odds of it happening in a given year is less than 1%. Meanwhile, your car insurance company things that the the sum of the products of the cost and probability of all of the things that could lead you to make a claim in the next year is pretty close to £500.

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cankennykencan@reddit

Where did you find breakdown cover for £10?

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purplechemist@reddit

I am a participant in “bangernomics”; I buy an older car with lots of miles and I drive it til it falls apart. I have owned two cars in the last 20 years.

I have used my breakdown cover exactly twice. Once when I couldn’t get the wheel nuts off to change a flat, and the other when my engine cut out and wouldn’t restart. (A problem they couldn’t diagnose as it didn’t recur while they were there).

My roadside recovery is almost a complete waste of money (though, like insurance, you hope to never need it).

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Lufc87@reddit

You're comparing apples and ostriches

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Neat-Ostrich7135@reddit

Costing if dealing with your breakdown can't be £100,000

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carnage2006@reddit

What does £10 a year get you out of interest?

Do you have to pay upfront for your call out and then claim back?

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daveyboi80@reddit

Yeah, with a wad of cash

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SituationMundane5452@reddit

Insurance is legalised robbery

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marsman@reddit

I'd love an explanation for that..

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CoffeeandaTwix@reddit

If insurance only had value if you were going to need it then group insurance couldn't exist as a concept.

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mattcannon2@reddit

Replacing a tyre at the roadside or a tow is like £1000 max.

Writing off a Rolls Royce and smashing into the front of a Rolex dealership? Many many pounds will be required.

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Contact_Patch@reddit

I'd wager for £10 the service you'll get is awful.

£60 20 years ago was the cheapest I got that was actually reasonable.

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nsfgod@reddit

One is a legal requirement, the other is an option.

Also the cost of a recovery is a pretty consistent figure and risk. The cost of the potential insurance is a hugely variable cost and risk.

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Manatsuu@reddit

Because the cost of sorting out a breakdown incident will on average be far far cheaper than a breakdown.

I’m kinda curious as to what car you have that is only 10 years old but you had 2 breakdowns last year? What was the cause of the breakdowns?

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MercuryJellyfish@reddit

Any insurance costs more or less the price of fixing a thing for everyone in the pool who claims, divided by the royal number of people in the pool. The insurance company makes its money by investing all the premiums and keeping the profits.

So, you have two things. One: getting your car home isn't too expensive. Two: how often do you break down? Not that often.

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ManOfTheBroth@reddit

Breakdown only needs to cover the cost of recovering your vehicle (essentially, obviously there are tiers). Insurance needs to cover everything you could potentially damage.

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VentureIntoVoid@reddit

OP probably thinking of they broke down the break down cover will fix their car too and that insurance is too to just fix their car too

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zeusoid@reddit

U.K. insurance has minimum max liability of £20m

Other countries have cheaper insurance by having insurance that cover a max liability of as low as £50k

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adreddit298@reddit

You're generally unlikely to call a breakdown company, so if it's too expensive, you won't think it's worth it.

You have to have insurance, so they can essentially charge what they want, within reason.

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BarNo3385@reddit

Insurance is mainly insuring you against the damage you cause to other things.

So its not about the value or reliability of your car. Its about the rare Ferrari you wrote off when you drove in to it

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OldAd9280@reddit

People are much more expensive than Ferraris

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Additional-Guard-211@reddit

Because when one has an accident the cost of to repair/replace the car is only one, typically small cost that the insurer will payout from an accident. I think the highest ever UK personal injury payout was i think £6.5 million (and this was about 20 years ago!) due to that persons ongoing care for the rest of their life. There will have been more in solicitors on both sides, on top of street furniture, and other things that all will have had to be paid for out of our insurance premiums. The recovery don’t have anything like such issues!

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Remote-Pool7787@reddit

Because the most expensive aspect of breakdown cover would be if you required a long distance tow. But even then it’s nothing compared with accidents claims. It’s £10 because you’re already paying £500. If you were to take out individual membership with the AA or RAC, it would not cost £10

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funkmachine7@reddit

Its still cheap, like 5-60 a year simply the costs are fix, recovery from land end to john o grots is only so much.

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RecentTwo544@reddit

Partly because, as others have said, potential damage from an incident that requires an insurance payout might be MUCH more than any kind of breakdown.

But lets not kid ourselves that it is also partly because insurance is mandatory so they can afford to take the piss a bit.

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Bigbigcheese@reddit

But lets not kid ourselves - it is also partly because insurance is mandatory so they can afford to take the piss a bit.

The fact that it's mandatory makes it cheaper, not more expensive... The cost base is spread wider.

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Katena789@reddit

Actually, motor insurance is both heavily regulated, and very competitive.

Unless you're a customer that the insurer doesn't want (e.g. a lot of companies avoid young drivers, specialist cars, or worst, combination of the two), your price is a pretty accurate reflection of your likely cost

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ChickenPijja@reddit

Breakdown cover only covers you. Insurance covers you against the millions of other cars out there, and people can crash into you when your nowhere near your car.

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Actual-Morning110@reddit

Another fact: When you pay £11 for AA / RAC breakdown, the actualy cost of insurance is £2, rest is admin and processing fee. So, 80% of the amonth is cost to them which they use to avoid taxes.

Also, its businees of numbers, more the customer , more the revenue. That's whay there's always some offers.

Out of million customers paying average £8, with £100,000-£500,000 claims worth claims per year, do the math for profits. Warren Buffertt loves investing in such companies.

Maybe you already have heard of this: Insurance business is a scam business.

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smith9447@reddit

As other people have said insurance is so expensive because it has to cover so much. I remember the insurance on my rather expensive coupe being less than on the family people carrier. When I asked why the company rep said (to paraphrase) : wrap the coupe round a tree two dead or crippled, do the same in the people carrier 7 dead or crippled.

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yesiamclutz@reddit

Plenty of other valid points, but also you have to have car insurance, whilst breakdown cover is not legally mandated, so breakdown cover companies have to earn you business.

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