TOW TRUCK INSURANCE FAQs
#1 FAQ FROM 2017
How much does tow truck insurance cost?
Tow truck insurance costs vary greatly depending on your business. There are many different factors that drive your insurance rates, so in order to get an accurate reflection of how much your insurance will cost we ask that you fill out our quote form (it doesn’t take long at all) or give us a call today.
For more information and to see approximate values for rates, please read this article, “How much does tow truck insurance cost?”
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What factors influence the cost of my tow truck insurance?
There are lots of different details about your business that impact your tow truck insurance rates, for better or for worse. The following are a few things that insurance carriers may look at when providing a quote for a tow truck business:
- Your drivers
- Loss-runs (How many claims or losses you’ve had in the past few years)
- Your risks (What kind of business you have - repo, towing, roadside assistance, etc.)
- Type of tow trucks you use (Make, model, weight, age)
- How many trucks you have
- What you haul
- Where you’re located
- Tow radius
- How long you’ve been in business
UNDERSTANDING TOW TRUCK INSURANCE COVERAGES
How much does tow truck insurance cost?
There are lots of different coverages to choose from. The types of insurance and the amount of insurance you need depends on your business and what you do. Some of the most common coverages are:
Auto liability: Covers expenses you’re legally obligated to pay if you’re in an accident.
Physical damage coverage: This is the insurance that can repair your tow truck and get it back on the road ASAP if it's damaged in an accident - or if it's damaged by a covered loss such as fire.
On-hook/In-tow: This protects your client’s car while it’s attached to your truck.
Garage liability: Garage liability can protect you if the day-to-day operations of your business or the services you provide cause harm to others.
Garagekeepers: This protects your clients’ cars while you have them in your care, custody, and control (i.e. If you keep customers’ cars on your lot)
Wrongful repo: Wrongful repo insurance protects you from claims that you wrongfully repossessed a car.
How can I lower my tow truck or wrecker insurance rates?
There are a few ways that you can lower your tow truck insurance premiums. Basically, you want to avoid claims as much as possible. Claims cause your rates to go up. That means that you need to put an emphasis on safety at your towing business. Safety allows you to avoid claims before they happen, which helps your insurance rates. Sometimes things are out of our control, but with proper safety policies and habits, you can reduce your chances of disaster.
Some safety measures you can take are…
- GPS systems in your trucks to monitor speed.
- Doing MVR (Motor Vehicle Record) checks and background checks when you’re hiring.
- Having regular safety meetings.
- Giving your drivers continuing training.
- Having an employee handbook that establishes safety policies on distracted driving, seatbelts, etc.
- Doing pre-trip vehicle inspections.
To keep your premiums down, you might want to handle small claims on your own. For more information, see “When should I file a claim on my tow truck insurance?” below.
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Why have tow truck insurance rates been rising?
Tow truck insurance rates have been going up because carriers are leaving the tow truck insurance market. Carriers are leaving the market because they see towing as a very dangerous industry with a high probability of accidents and claims. Drivers work on the side of the road very close to moving vehicles. The tow trucks themselves are large and heavy, which means that they have a huge potential for causing damage.
Distracted driving has made the roads unsafe, too, for tow truck drivers and those they share the roads with. And because carriers are leaving the market, the rates that the companies who do write for tow truck companies have gone up by a lot.
Do I need garage liability coverage even if I don’t have a garage?
It’s definitely something to consider. Garage liability doesn’t just protect a physical garage. Even if you don’t have a garage you’d be protected from various risks that you face. Garage liability protects you from claims that arise from the services that your business provides in its day-to-day operations.
For example, let’s say you have a roadside assistance company. You get called out to change a tire. The driver gets five miles down the road before the tire falls off the car. Garage liability could protect you.
Will doing repo increase my rates?
Yes. If your business does more than 50% repo, it’s basically considered to be 100% repo. Your rates will probably be higher if you do more than 5% repo because your risk is higher. Repo presents its own risks, including angry vehicle owners who might become violent to the tow truck driver. There’s also the change of wrongful repo, or taking a car that you’re not supposed to take.
However, you need to make sure that you’re calculating your “repo percentage” correctly. It’s based off of the number of tows, not the revenue that you take in.
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Do I need to do MVRs and background checks on my drivers?
It’s a good idea to run MVRs on drivers that you’re considering hiring and to run them every so often to keep tabs on any changes. An MVR basically gives you an idea of the driving record of the driver in question. If the background check and MVR are clean, the driver is less of a risk for your business.
Your drivers do impact your insurance rates. If they have pretty clean driving records, your premiums could be lower.
When should I file a claim on my tow truck insurance?
Claims can make your premiums go up, so it’s important to really evaluate whether or not you need to file a claim for minor damage. If it’s a relatively small potential claim, you might want to consider handling it out of your own pocket so that it won’t impact your premiums. Remember, having claims makes you more of a risk to your insurance company, which means that they might raise your rates or even nonrenew your policy.
You also have to consider your deductible, or how much you agree to pay for a claim before the insurance company steps in to start covering costs. If the cost of the claim is only slightly above your deductible, it might not be worth it to file a claim. For example, say you have a $1,250 claim. Your deductible for that particular policy is $1,000. That means you have to pay $1,000 before your insurance company will pay the remaining $250. Is that $500 worth it, or could you handle the entire $1,500 on your own?
If you have a situation and are thinking about filing a claim, talk to your agent first to get some advice on what to do.
How do my contracts affect my rates?
Contracts can influence your tow truck insurance rates. Now, rotational contracts (city, municipal, state, etc.) typically won’t change your rates that much. You might see a small fee of about $35, give or take. However, if you have a copart contract, the insurance company will categorize you as an auto hauler, even if you only haul salvage. And being classified as an auto hauler can make your rates go up.