Brandon, a couple of technical questions. First, you talk about the "probability" of any car getting damaged. But surely a car wash is not qualified to act as an actuary (if it was it should immediately shut down all operations and do acturial consulting work instead). So a car wash company isn't faced with a "probability" of a car being damaged - it's faced with a "price" for being insured.

Clearly if the amount of the coverage (again, in this artificial scenario) is less than you can "fix" a Ferrari for, then perhaps they should turn Ferrari's away if they are very risk-averse. (again, all this is in the artificial model.)

But if the insurance-company says, "We can increase your coverage to (cost of fixing the ferrari) for a difference of (difference)" then the only way they can possibly pay that difference is by lowering their margins on every car wash, or by discriminating and factoring that difference only into the appropriate washes.

all this is more correct than your claim, isn't it? (again, in the proposed model.)

incidentally, I consider the proposed model to be extremely braindead. A car wash is not actually going to pay for any damage, and if it did it certainly would never actually pay for a museum-quality paint job, and if it DID then the price would not be ten bucks per car wash, a shop that can afford these kinds of lavish customer catering and appeasement would be starting at fifty dollars or something.

What actually happens is there is a sign saying they disclaim all responsibility for any damage. What also actually happens is normal price discrimination.

so I think a clever answer to "Why are you charging me more just because I have a ferrari" is "only ferrari owners would care about a small scratch from a CAR WASH, and we don't get many of you, so we have to charge you more to pay for that there sign there (point to large disclaimer sign.) Ten bucks please."