A membership in AAA works a lot like a small insurance policy for vehicle emergency costs. It covers many items, and some of them are potentially costly. A basic membership will cost $47 in my area. When you sign up, you will find that rates will vary depending on where you live. This is likely because repair rates and repair shop availability are different across the country.
The first commonly advertised benefit is that of Roadside Assistance for members. This will pay for many things including the cost of someone coming out to diagnose and potentially fix a problem with your car, change a flat tire, give your battery a boost, and deliver fuel to you. Any one of these items might cost in the neighborhood of $50 to $100 if you had to pay for it yourself.
Towing services are available up to 6 miles from the location of the breakdown, only once per breakdown. This charge can typically run $200 to $400. Additional “extrication fees” are included also unless specialized equipment is needed beyond a standard truck with a winch.
A basic membership will also pay up to $50 to have a locksmith rescue you when you lock your keys in your car.
With these three things, you have a potential benefit of $550. If you used one of these services over a 10-year period, you will have exceeded the cost of your 10-year membership dues of around $47. In the past 10 years, I had run out of fuel on the road once, I have had to have my car unlocked for me once, but I thankfully have not had to be towed.
With towing fees, do keep in mind that if you pay for collision insurance, that policy will pay for the car to be towed in the event of an accident, which negates that benefit, however your insurance coverage will not pay in the event of a mechanical breakdown, something that the AAA membership will cover with certain restrictions.
In addition to the benefits mentioned above, the AAA membership also offers Approved Auto Repair & Approved Auto Body Repair, AAA Driver Improvement and Young Driver Programs, Auto loans, something called a “Hassle-free vehicle purchasing program”, Extended mechanical service protection for your car, Bail Bond Service for AAA Members if you are arrested, and Theft Reward Protection where they’ll pay $500 too anyone providing information on your stolen vehicle. While it is tough to place a monetary value on some of these benefits, a few of them do appear to have value on the surface. However, many look to be just another product endorsed by the AAA, such as the approved auto body repair and the auto loans.
Overall, in a cost vs. benefit analysis, it would appear that the AAA program offers a moderate benefit package. If you compare this to insurance for instance, we can look at the potential payout of an auto policy. The average auto policy will pay up to $300,000 in benefits if you injure someone and if you have collision and comprehensive coverage on a $20,000 car, that means that your auto insurer could pay up to $320,000 for any one loss. An average premium for this type of policy will run in the $1500 per year range. If we divide the risk by the premium, we get $213 in insurance benefit per premium dollar. If we take the same method to evaluate the AAA policy, we would see a monetary benefit of $550 divided by a premium cost of $47. This leaves $11.70 in benefits per premium dollar. Now this assumes that you will only use the AAA services once in a given year. The fact is that you could potentially need them several times per year. However, most auto insurance policies are also written on a “Per Occurrence” basis, which means that you could have two losses paid in the same year that exceeded the $320,000 we spoke of.
Overall, the AAA offers many benefits but you have to look at the product for what it is. It is a small insurance policy with small benefits. As an alternative to the AAA membership, you could just keep a small emergency fund for the purpose of roadside assistance. If you are disciplined enough, this could be all you need to rescue you if something goes wrong with your vehicle.