Repossession is not for the faint of heart. If you have a tow truck business that does repo, you know that your line of work comes with plenty of risks, which is why it’s so important to make sure that you have the right insurance. You might be wondering how to insure a repo business and what kind of tow truck insurance you need. One type of insurance that’s essential for tow truck businesses that do repossessions is repo insurance (or wrongful repo insurance.) Now, the burning question you might have is how much does repo insurance cost. We’ll explain what wrongful repossession insurance is and how much repo insurance costs.
What is wrongful repo insurance?
Wrongful repo insurance can protect your business if you accidentally manage to take a car that you’re not supposed to. That could lead to some major trouble. The thing is, people don’t want you to take their car away, and they could get very upset if you weren’t even supposed to take the car away in the first place.
How much does repo insurance cost?
The cost of tow truck insurance varies from business to business, but a company that has one tow truck and does 25% repo may pay $10,000 a year for their various insurance coverages. Again, this is a rough ballpark – your rate may be lower or higher. The cost will vary from business to business because every business is different.
The higher cost is because of the risks specific to repo that you face. Insurance companies aren’t crazy about risk, so the rate is higher. The exposures that insurance companies are concerned about are…
- People who get angry: Like we said, people don’t like it when their cars get taken away. Someone could get violent and hurt the driver. To avoid this, your drivers might go out late at night, which also puts them at risk.
- Wrongful repossession: Taking a car that you’re not supposed to.
- Being hasty: Your driver wants to get out of dodge fast. They might not secure the chains until they’re far enough away from the scene, and that could cause some problems if the vehicle they’re hauling doesn’t cooperate.
So. That’s why the cost of insurance for a business that does repossessions might be higher than the cost of tow truck insurance for a business that only does regular tows.
What is your percentage of repo?
You need to consider the percentage of repo work that you do (if your business isn’t exclusively repossessions.) This does have an impact on your rates, which is why an insurance agent will ask what percentage of repossessions you do. If you’re under 5% repo, your rates may be the same as if you didn’t do repossessions. If you do more than 50% repo, insurance companies may see your business the same as if you did 100% repossessions. And that means you could see a 100% increase in your rates over what you’d pay if you didn’t do repossessions at all.
Pro tip: Know how to answer the insurance agent when they ask what percentage of repo you are. To calculate your this percentage, use the number of tows, not the earnings from those tows. Insurance companies look at the percentage of jobs that are repo, not what percentage of your income comes from repossession. This is because because repossessions usually pay a lot more than regular tows. Anyways, this means that if you do 60 tows in a month and ten of those are repossessions, your repo percentage would be 17%.
How to get a repo insurance quote.
We mentioned before that the cost of tow truck insurance will be different for every company. The only way to find out exactly how much insurance will cost for your tow truck business is to get a quote. Getting a quote from an insurance professional will help you get the most accurate idea of how much repo insurance costs for your business because they will have all the details about your business. We recommend that you shop around to ensure that you get the best coverage at the best possible rate. Shopping around basically means that you get multiple tow truck insurance quotes to compare prices.
Our team can help you with your tow truck insurance shopping. We’ll shop your rates for you and come back with three quotes. All you have to do to get tow truck insurance quotes from our team of insurance professionals is fill out our online form or give us a call today.