PHYSICAL DAMAGE COVERAGE

SCENARIO 1

One of your drivers is cruising along on the way to help a stranded driver when a bird flies into their windshield, startling them. They accidentally hit someone else’s car. Fortunately no one’s seriously hurt...except that your tow truck looks like it’s seen better days. It’s a bit smashed up after its accident, but it protected your driver from injury. You need that truck keep your business running, so you want to get it all fixed up as soon as possible so that you can get it back on the road. You’re not excited to see the repair bill, however. But good news - your collision coverage would step in to help you cover the costs of the repairs.

SCENARIO 2

You come into work one morning after a bad storm. You squelch across the yard and find that a tree branch has fallen onto your truck, smashing through the windshield and destroying the dashboard. The truck looks like, well, a tree fell into it. There’s glass everywhere and you strongly suspect there could be more damage than just the windshield. Great. Now what? There’s a whopper of an expense that you weren’t expecting. But then you remember that you have comprehensive coverage, meaning that your insurance will pay out after you pay your deductible. Phew!

What is physical damage coverage?

Physical damage coverage is the insurance that will let you get your tow truck on the road again if it’s in an accident. Since tow trucks are so expensive, it’s important that you have enough insurance to back you up in case one of your trucks is damaged. Repairing or replacing a tow truck is a huge financial responsibility that you don’t want to face on your own.

There are a couple different types of physical damage coverage:

Collision coverage.

Collision coverage will cover the damages to your truck that occur because of a crash with another object. You will have to pay the deductible first, but then your insurance will pay either up to your policy’s limit or up to the Actual Cash Value of the tow truck.

What’s the actual cash value of a truck? The ACV is how much the truck was worth when the accident or damage happened. This is essentially the depreciated value. Say your truck is worth $12,000. There’s an accident and there’s $15,000 worth of damage. The insurance company will most likely just pay out the $12,000 to cover the cost of the truck itself (after you pay your deductible) rather than paying the $15,000.

Comprehensive coverage:

Comprehensive coverage will cover damage to your truck that was not caused by a crash or collision. This is the insurance that would protect your truck from theft, vandalism, fire, or a tree falling on it. Again, your insurance will kick in after you pay your deductible.

What’s a deductible? A deductible is the amount that you agree to pay in case of damage to your truck before your insurance will step in to start covering costs. For example, your deductible might be $1,000. If there’s $10,000 worth of damage to your truck, you’d pay $1,000 before your insurance company paid the remaining $9,000.

So, how much does physical damage coverage cost?

Well, that depends on how many trucks you have and what kind of towing operation you are. Usually, you’ll have a limit of coverage on it, too, meaning that insurance will only pay a certain amount. Insurance companies look at many details about your business before they decide whether or not to insure you and how much that insurance will cost. Some of the factors that affect the cost of tow truck or wrecker insurance are...

  • Your drivers: The age, experience, and driving records of your tow truck drivers can affect your insurance rates.
  • Claims/losses: If your business has a history of many claims or losses, your insurance rates may be higher because you're seen as being more of a risk. 
  • Speeding tickets: Speeding tickets are also seen as being an indicator of risk.
  • The truck (Year, make, and model): The value of your truck has a role in determining your rates.
  • Radius of operation: Where you're located and how far you go can also affect your rates. 
  • How long you've been in business: If you're an established business with a good loss record, you could get lower tow truck insurance rates than a newer business.

To find out how much physical damage coverage will cost for your tow truck business, let us get some quotes! We can help you find the best coverage at the best possible rate.

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