Tow truck insurance protects your business and drivers in the event of an accident while on the job. It is an essential piece of commercial insurance to have. This guide can help you decide what truck coverages you need and how to budget for such a purchase.
What is Tow Truck Insurance?
Tow truck insurance is a specialized auto insurance policy that covers your tow truck(s) and business. It gives you and your employee liability insurance and other policy add-on options like collision and comprehensive coverage.
It also has towing-industry-specific coverage like on-hook insurance that can provide better protection for your business operations and the vehicles in your care. Personal auto insurance cannot provide you with this type of coverage.
Why do towing businesses need insurance?
Illinois has the requirement that all commercial tow trucks carry a minimum of $350,000 in liability coverage. This is a requirement from the Illinois Commerce Commission's regulations. On the other hand Texas mandates $500,000 CSL for tow trucks operating on state highways. California has higher limits which range from $750,000 to $1,000,000 depending on gross vehicle weight.
Running a tow truck without proper coverage is a serious offense and can get your license suspended. It can also result in fines of anywhere from $1,000 to $10,000 per violation.
Types of Businesses That Need Tow Truck Insurance
Any business that owns or regularly utilizes tow trucks to conduct business needs towing insurance. Common examples of companies that rely on tow trucks include:
Roadside assistance
Auto body shops
Mechanic repair shops
Auto salvage businesses
Auto club contractors
Even if your industry is not listed above, but you use tow trucks regularly, you need tow truck coverage.
Operating a towing business without proper coverage can results in fines from the state and possibly the loss of your towing licenses or contracts.
Customized Insurance for your Towing and Storage Business
A Tow truck insurance policy will typically include the following coverages listed below.
Liability Insurance
Liability coverage will pay for property damage and bodily injuries that you cause to another driver in an accident. It will only cover their damage and bodily injury, never your own. Liability insurance can also help with legal fees should the other driver sue you.
Property Damage
Property damage insurance includes collision and comprehensive coverage. Collision insurance coverage will pay for damage to your vehicle following an accident. Comprehensive coverage pays for damage your vehicle sustains in a non-collision-related incident, like theft or vandalism.
Medical Payments
Medical payments coverage is a valuable addition to have after an accident. It pays out for the medical bills of the driver and the passengers, regardless of who was actually at fault.
Uninsured and Underinsured Motorist Coverage
Despite mandatory auto insurance in nearly every state, some motorists drive without it. Suppose you are caught up in an accident with such a driver. In that case, uninsured-underinsured motorist coverage can help insure you for damage and injuries due to the accident.
Additional Towing Insurance For Your Business
Tow Truck policies also offer some industry specific coverages that other commercial auto policies don't offer.
Hired & Non-Owned Liability
This type of insurance provides coverage for employees who use their vehicle or motor truck for the job or utilize trucks the business rents. It will help pay for liability if either truck gets into an accident while conducting business.
On-Hook Towing Insurance
This insurance coverage is designed specifically for tow companies. On-hook insurance will pay for repairs or replacement to vehicles you tow if they are damaged in transit by any hazards. Hence the “on-hook” part in the title. It usually covers damage caused by collision, fire, and theft. But remember that it will not protect the property inside the towed vehicle.
Garagekeepers Legal Liability Coverage
Garagekeepers legal liability insurance is an add-on insurance policy that protects the business from damage and theft to a towed vehicle stored in your garage. This type of vehicle insurance covers repair expenses and replacement costs.
Cargo Coverage
Cargo insurance is vital to keeping items in a towed vehicle safe. This type of property insurance will provide coverage if items in your customer’s car are damaged or stolen while under your care.
Workers Compensation
If an employee gets injured on the job, workers compensation will help cover their medical expenses and any lost wages. In Illinois it is a requirement for all businesses that have one or more employees to have workers comp.
In Texas, workers comp isn't mandatory for most employers. However, many towing contracts will ask to see proof of workers comp before awarding a job
How much does tow truck insurance cost?
Tow truck insurance premiums vary wildly depending on the type of truck you've got, what state you're in and the size of your operation. A typical light-duty flatbed tow truck is gonna cost between $3,000 and $6,000 to insure per year. Medium-duty wreckers fall into the $5,000 to $9,000 per year range. If you've got a heavy-duty rotator or an integrated tow truck, you can expect to pay $12,000 to $20,000 annually. These trucks are so much more expensive to replace and have a higher liability risk.
If you're an Illinois operator, you're probably paying a bit under the national average with typical annual premiums falling in the range of $4,000 to $8,000 for a single truck operation.
If you're in Texas or California, you can expect to pay 15 to 25% more because of the high traffic density and higher litigation costs raising the price.
Insurance Navy works closely with some of the big players in the commercial auto insurance industry like Progressive Commercial, National General, Dairyland and Bristol West. We get you the most competitive rates on the market for your towing operation. More often than not, drivers with a clean MVR and three or more years of commercial towing experience under their belt qualify for lower insurance premiums.
Here are some of the factors that influence how your tow truck insurance policy is rated :
Where your operation is based: Towing within a 25 mile radius tends to be cheaper than going long-haul and recovering vehicles that are 100 miles or more away.
The value and type of your truck: A $45,000 Jerr-Dan flatbed is going to be cheaper to insure than a $350,000 Miller Industries rotator.
Garagekeeper exposure: Storing 10 or more vehicles overnight for customers increases your liability and your premiums.
Your past loss history: If you've been involved in an at fault accident in the past three years, it can increase your premiums by 20 to 40%.
Your DOT and MC authority: If you are doing interstate towing then you've got to file with the FMCSA and that's going to raise your costs.
Get a Tow Truck Insurance Quote
Insurance Navy provides tow truck insurance quotes for flatbeds, wheel-lifts, wreckers and rotators. We're working with Progressive Commercial, National General, Dairyland and a whole network of other carriers that specialize in commercial auto to get you the best rates available.
If you want a quote for your policy, have a few details ready: your truck year, make, model and VIN number. After that we need to know your operating radius, how many vehicles you store overnight and your MVRs for all drivers.
If you want to get a quote, you can do it online, by calling us at 888-949-6289 or by stopping by one of our locations in Illinois, Indiana or Texas.
* Tow Truck Insurance may only be available in some states; please call an insurance agent for more information.