This was an good explanation and it made me consider some things that hadn't occurred to me so thanks :)
I figured the probability isn't handled by the car wash itself but instead essential to derive the price of the quote. Surely they must give an insurer the volume of cars coming through, yes? What seemed unlikely to me is that the car wash must also show the types of cars getting washed. This would be something handled by the insurance company after making certain assumptions that factor into the risk.
Assuming that each car wash did pay damages (which as you mentioned they don't), do you think they would charge premiums for washing all luxury cars? The price to insure against damages seems like it should be fixed per car (even if based off volume). One month might be oversaturated with $30,000 cars and another month might have more $20,000 cars. Will the cost to insure the car wash against potential damages these months not be the same even when a higher saturation of more expensive cars incurs more risk for the insurer?
My answer to this forms my basis of why I didn't like the example, even artificially, which is that the price to insure every car is the same based on the likelihood of all cars getting damaged and the price to fix them (monthly insurance cost/amount of cars). The insurance cost has no respect to which cars go through the wash - probably because it's too much of a hassle for the insurer to police which cars are actually visiting and making a more accurate calculation of risk. Instead, they assume every wash has a certain amount of luxury cars - even if they don't. Obviously this wouldn't hurt margins if they accepted the cars that are covered but it doesn't stop them from raising margins, which they still might do.
I figured the probability isn't handled by the car wash itself but instead essential to derive the price of the quote. Surely they must give an insurer the volume of cars coming through, yes? What seemed unlikely to me is that the car wash must also show the types of cars getting washed. This would be something handled by the insurance company after making certain assumptions that factor into the risk.
Assuming that each car wash did pay damages (which as you mentioned they don't), do you think they would charge premiums for washing all luxury cars? The price to insure against damages seems like it should be fixed per car (even if based off volume). One month might be oversaturated with $30,000 cars and another month might have more $20,000 cars. Will the cost to insure the car wash against potential damages these months not be the same even when a higher saturation of more expensive cars incurs more risk for the insurer?
My answer to this forms my basis of why I didn't like the example, even artificially, which is that the price to insure every car is the same based on the likelihood of all cars getting damaged and the price to fix them (monthly insurance cost/amount of cars). The insurance cost has no respect to which cars go through the wash - probably because it's too much of a hassle for the insurer to police which cars are actually visiting and making a more accurate calculation of risk. Instead, they assume every wash has a certain amount of luxury cars - even if they don't. Obviously this wouldn't hurt margins if they accepted the cars that are covered but it doesn't stop them from raising margins, which they still might do.