Insurance Quotes for Tow Trucks

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What is Tow Truck Insurance?

If you own a tow truck company it is critical that you understand the types of insurance you need and why. You cannot simply add your tow truck to your existing Personal Auto insurance policy, as they exclude business operations. Since your tow truck would be generating an income, this would not qualify and is also probably too heavy as some auto insurance policies have a gross vehicle weight limit. The biggest reason you need tow truck insurance is that it is specialized and comes with what is called On-Hook coverage which pays for repairs to things you are towing, such as vehicles and watercraft.

As a business owner, you should understand what Tow Truck insurance covers.

  • Commercial Auto - Pays for bodily injury and property damage for accidents in which you or your employees are held liable. Usually, at-fault accidents, like a rear-end collision, are common. The policy would cover any lawsuit related claims as well as fixing their vehicle and paying medical bills. The average limit of liability is $1,000,000 combined which includes both bodily injury and property damage. If you don’t think this limit is enough, you can purchase an Umbrella Liability insurance policy.

  • Physical Damage - You definitely want to cover the tow truck itself if you are in an accident since it is the thing you depend on the most to generate an income. Collision and comprehensive coverages will be available for you to choose from. Collision is colliding with anything other than an animal, and comprehensive will pay for damages to glass, theft, hitting an animal, a tree falling on it, or anything else considered an "act of God."

  • Personal Injury - If you or an employee are involved in an accident that is serious enough where it affects the ability to work, there is coverage for lost wages and medical expenses.

  • Hired and Non-Owned Auto Liability - If you have employees that use their own vehicles at all for work, or you plan on renting any vehicles in the business name you definitely want this coverage. It pays for liability associated with both of these scenarios. Even if you send an employee out to get lunch and they are still on the luck, your business could be held liable if they are at fault in an accident. Keep in mind this will not pay for their liability for their own vehicle, they would need to seek coverage on their Personal Auto insurance policy.

  • Uninsured and Underinsured Motorist - It is a scary fact that there are drivers on the road that do not have insurance. These are uninsured motorists. There are also motorists that do not have enough insurance to cover claims, which are underinsured. Tow truck insurance will provide coverage for you for these situations.

What Insurance Do You Need for a Tow Truck?

A tow truck business can have a lot of exposure to risk, but the good news is that there are a lot of insurance options to protect your business. Here are some policies that we recommend you have for your tow truck operation.

  1. Commercial Auto - As discussed above, you will need a Commercial Auto policy to cover the liability and physical damage associated with your tow truck. You can also add some extra bells and whistles here like funeral and accidental death and dismemberment, which may be good coverage to have even for your employees.
  2. On-Hook - If you plan to do work for any other company or individual, they may want to see that you are going to provide coverage if something should happen to whatever it is that you are towing. On-hook coverage will pay for physical damage to the thing you are towing, but keep in mind that it does not cover anything inside.
  3. Cargo - Since on-hook does not provide any coverage for items inside a vehicle (or anything) being towed, cargo insurance was born. If you are towing any kind of commercial carrier truck, box truck, or any other vehicle that may still have some cargo inside, this coverage is essential. Cargo can add up to tens, if not hundreds, of thousands of dollars and because it will be in your care, custody, and control you will be responsible for it.
  4. Garagekeepers - Sometimes tow truck drivers have a garage or lot that they store vehicles in after they are towed. Garagekeepers insurance will provide coverage for these vehicles should they be damaged while in the garage or on the lot.
  5. Umbrella - Due to the size of some tow trucks, and then adding the weight of the vehicle being towed, an accident can be catastrophic.
  6. Workers Compensation - Having employees can be exciting and help your business grow. That is why it is essential to have Workers Compensation insurance if you do have employees, to provide coverage for lost wages and medical bills should they be injured or become ill on the job.
  7. Employment Practices Liability - These days employees can sue for almost anything, and some situations can be taken differently than they were intended. Because of things like discrimination, sexual harassment, and wage discrimination, Employment Practices Liability was created. It also covers wrongful termination and wage discrepancies such as not being paid the amount that was agreed upon.

Equally as important as knowing the coverages available to you, is knowing what the exclusions are. Unfortunately, the exclusions will vary from company to company, as well as policy to policy. That is why it is critical for you to read your policies and work with a professional insurance agent. An agent can help you sort through the different policies and determine if there are any gaps, and hopefully fill in those gaps with either endorsements or other insurance policies.

What Factors Can Affect the Cost of Tow Truck Insurance?

Because the risk of a tow truck business can be a bit high, Commercial Truck insurance can be as well. Some factors to keep in mind that will influence the price of insurance include:

  • Size - The number of employees you have will certainly affect the price of your insurance, especially Workers Compensation which is based on payroll. Additionally, the size of your fleet will have an impact and the number of sales you are doing annually.

  • Past claims history - Commercial insurance becomes penalized with a premium increase when there are frequent and severe claims. If your business has a history of claims, this will be a factor that the insurance company will take into account.

  • Zone - Where your tow trucks are operating is going to impact your insurance premiums. Tow trucks that mostly service a suburban area will probably get a better rate than those going to a city that has higher criminal activity.

  • Source of Income - If towing is the main source of your business profits, you will end up paying more than if you do it incidentally. For example, if you own and operate a service garage and only tow vehicles once in a while, the premiums will be more affordable.

  • Drivers - Be sure to hire employees with clean, or almost clean driving records or you may see your insurance premiums skyrocket. If your drivers end up getting a violation, you should have a procedure in place for disciplinary action, as well as how to prevent them in the future. If it ends up being bad enough, the insurance company can ask you to exclude that driver from the policy, which means they will not be covered to drive your tow trucks.

  • Experience - If you have been in business for a long time, or if you are new but have been driving a tow truck for someone else for a long time, your rates will be more affordable than a brand new industry person.

  • What you are towing - Of course, the more valuable the cargo, the higher the rates. If you are towing high-end vehicles that are worth more than $50,000 then your rates will be a bit higher than if you are towing more economical cars.

  • Deductibles - Just like in Personal Auto insurance, the higher the deductible you have the lower the premiums will be. Be sure to check prices though, because going from a $500 deductible to a $1,000 deductible may not be worth the price savings.

Are you ready to get down to business?

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How to Get a Quote for Tow Truck Insurance?

Coverwallet has several options for your tow truck operation. You can get a quote online or call to speak to one of our experienced advisors. They will discuss your whole operation and make recommendations based on your unique situation. All free and all with no obligation. Because of the complex nature of the policies associated with a tow truck business, we would be happy to help sort through it all with you.

Business Insurance

Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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