How To Get Commercial Insurance for Tow Trucks

Tow truck insurance provides liability coverage for tow truck drivers in case they cause a motor vehicle accident or accidentally damage a customer’s car while it is being towed or stored in their facility. Auto insurance claims can be expensive so auto shops, roadside service providers or any other type of business that provides a towing service should buy adequate coverage. Otherwise, they risk paying for damages out of pocket.

On This Page

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  What Is Tow Truck Business Insurance?

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  Who Needs Tow Truck Business Insurance?

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  Do Tow Truck Companies Need Insurance?

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  What Types of Insurance Does a Tow Truck Business Need?

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  How Much Does Tow Truck Insurance Cost?

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  How Do I Get Commercial Insurance for My Tow Truck Company?

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  FAQs

What Is Tow Truck Business Insurance?

The purpose of tow truck business insurance, or tow company insurance, is to offer financial security if towing activities result in accidents, property damage, bodily injury or other covered losses. Operators without sufficient insurance may be held personally accountable for damages and incur high out-of-pocket costs.

Who Needs Tow Truck Business Insurance?

Tow truck insurance coverage is essential for various businesses, both new and old, that provide towing services. Generally, if meet any of the following professions, you should look into buying tow truck business insurance:

• Automobile maintenance shops
• Body shops
• Contractors associated with auto clubs
• Full-service gas stations
• Providers of roadside services
• Rotational towing operators
• Transporters working with auto auctions and salvage.

Do Tow Truck Companies Need Insurance?

Tow truck companies must carry their state's minimum commercial vehicle liability insurance before one of their trucks ever hits the road. Any tow trucking business without state-mandated coverage will face out-of-pocket expenses in case of an accident and the potential shutdown of their business should an accident occur.

On top of any car insurance requirements, most businesses with employees must have workers' compensation.

Forgoing this coverage could result in sizable fines for your business and/or possibly jail time for you.

What Types of Insurance Does a Tow Truck Business Need?

Commercial tow truck insurance varies wildly in terms of what it can cover. Luckily, we're here to simplify things by giving you a comprehensive list of the different insurance types you can choose for your towing business.

Commercial Auto Insurance

Commercial auto insurance is a towing company's first line of protection, offering liability coverage (required in most states) for bodily injury and property damage you cause while on the road. Physical damage coverage can also be purchased, which will cover damages to the tow truck in a motor vehicle accident. It may also include combined additional coverage (CAC), which is a specific type of comprehensive coverage for large trucks. CAC may protect against losses involving fire, theft, windstorms and even earthquake and flood in some cases.

A commercial auto plan can also cover injuries to you and your passengers through medical payments insurance (MedPay). You can even include an add-on known as uninsured/underinsured motorist insurance, covering your vehicle if someone with no insurance or insufficient insurance damages it.

With vehicle claims being as high as $45,000, you can’t afford not to have commercial auto coverage.^[1]

Tow General Liability Insurance

Also known as general liability insurance, tow general liability coverage includes protection for bodily injury, property damage and personal injury. In other words, the general liability policy will cover liability risks that occur outside a motor vehicle accident, such as if a tow truck driver inadvertently trips a client and causes them to break their wrist and phone while hitching the client’s vehicle.

Garage Keepers Liability Insurance

Garage keepers liability insurance, or storage location insurance, protects customer vehicles stored in your facility. If the car is somehow damaged as a result of vandalism, theft, fire, an extreme weather event or a collision, garage keepers liability insurance should pay the cost of repairing or replacing the customer’s vehicle.

On-Hook Towing Insurance

On-hook towing insurance is an add-on to a commercial auto liability policy that provides liability coverage for any vehicle you transport. So if you get in an accident that damages a customer's car while it’s hitched to your tow truck, your policy will help cover the costs for repairs.

Workers' Compensation Insurance

Workers' compensation insurance includes medical payment coverage and lost wages coverage for workers who become ill or are injured due to their work. If a freak accident causes one of your tow truck drivers to get his foot run over by a vehicle they're loading onto a truck, they will be covered. This coverage is typically required of any business with employees in most states.

Additional Insurance Policies To Consider

Below are a few extra coverages to help round out your tow truck insurance needs.

• Professional liability insurance: Also called errors and omissions insurance (E&O), coverage includes liability protection for negligence and dereliction of professional duty, such as dropping a vehicle off at the wrong auto shop after it’s been towed or improperly hitching a customer’s car to the tow truck.
• Equipment breakdown insurance: Covers repairs or replacement of equipment used on tow trucks, such as towing winches, in case they suddenly break down. Coverage may also include lost revenue if you’re unable to resume business due to a sudden breakdown.

How Much Does Tow Truck Insurance Cost?

Commercial tow truck insurance will typically range in cost from $4,000 to $15,000 per year.^[2] The actual cost will largely depend on several factors, including the type of tow truck (e.g., flatbed, hook and chain or wheel-lift), the number of tow trucks being insured, the company’s safety programs and the coverage options you choose. Generally, you will need on-hook towing coverage but you may also want to add optional coverage types like equipment breakdown insurance.

Keep in mind that your business may need other coverage options as well, such as general liability, professional liability and garage keepers liability insurance. General liability is a common type of coverage and typically costs around $1,057 annually.^[3] While this does add to your insurance costs, buying these other types of liability coverage ensures that you are protected both on and off the road.

If you find that costs are higher than you anticipated, always remember to shop around. Different insurance companies have different pricing methodologies, so one company may charge a cheaper premium for the same level of coverage as another.

How Do I Get Commercial Insurance for My Tow Truck Company?

Buying commercial insurance for tow truck drivers is simple and can be done by following these steps:

1. Determine the specific types of coverage your tow truck company requires, such as commercial auto insurance, general liability insurance and potentially additional coverage like workers' compensation or garage keepers' insurance.
2. Look for companies specializing in commercial auto insurance or those offering coverage for tow truck businesses.
3. Prepare the required documentation and information for your insurance application. This may include details about your company's structure, vehicle information, driver records and claims history.
4. Contact multiple insurance providers to request quotes based on your company's needs. You can also use SmartFinancial to get multiple quotes at once. Provide the necessary information and you’ll get several quotes in minutes.
5. Carefully compare quotes once you've received several from multiple providers. Look beyond the price and consider the coverage limits, exclusions and deductibles. Ensure that the policies meet your requirements and adequately protect your business.
6. Consult with an insurance agent or broker who specializes in commercial insurance if you need clarification on the details or need assistance in choosing the right insurance coverage.
7. Contact the insurer to finalize the purchase. Review the policy documents carefully, understand the terms and conditions and ensure all the necessary coverage is included.
8. Keep copies of your insurance policy, premium payment receipts and other relevant documents in a safe and easily accessible place. Maintain accurate records of your vehicles, drivers and any incidents or claims.
9. Periodically review your insurance coverage to ensure it protects your business adequately as your insurance needs can change over time.