How to Start a Tow Truck Business

So, you’ve decided to go for it – you’re going to venture out on your own and start a tow truck business. That’s great! You’ll be able to enjoy the freedom of owning your own business and being the master of your own destiny. However, you have to be willing to put in long hours, rain or shine, and do hard work. A day in the life of a tow truck operator is driving to the car that needs to be transported, hooking the car up, driving it to its new location, and then unloading it…and then doing it all over again. Now, if you know this is the life for you, you’re probably wondering how to start a tow truck business.

Steps to Start a Tow Truck Business

Start Planning

What kind of towing do you want to do? Do you want to tow disabled vehicles on the side of the road? Do you want to do emergency roadside assistance? Do you want to tow impounded cars? Do you want to tow for regular drivers, the police, the city, a motor club, a repair shop? There are tons of people who need tow trucks, so you need to think about what your target market is and what types of tow trucks you want. You’ll also have to think about where you’re getting your contracts.

Then you have to consider things like how much it will cost to get your business off the ground. Consider the costs it will take to launch your business, other expenses you’ll need to pay like licenses and permits, and the cost of your tow truck insurance. And think about how to price your towing services.

You might also want to consider what kind of tow truck you want to get. This depends on what kind of work you’re going to be doing (different tow trucks are able to haul different vehicles.) Figure out what your dream truck is and then find out how much does a tow truck costs.

It’s also important to consider if you’ll need to partner with professionals like a towing dealership, accounting business, funding company, insurance agency, and a mechanic. If you do, you’ll want to make sure that the business understands the towing industry. Towing is unique, so you need someone who gets what you do.

Make It Official

To start a tow truck business, you’ll have to make it a legal entity. That just makes your business official and shifts liability from you as an individual to the business itself.

It’s important not to operate under your own name. By creating a legal entity, you give yourself a layer of financial protection if you’re ever in a situation where insurance, for whatever reason, won’t pay out a claim. And besides, it also helps make you look more professional if you have a legal entity.

Get Your Taxes Sorted Out

Ah, taxes. Can’t forget about those.

You’ll have to get your tax stuff in order before you open your business and start hauling cars. Make sure that you’re filing for the appropriate taxes when you start a tow truck business. You might want to partner with an accountant – that way you don’t have to worry about complicated tax forms, paperwork, and all that.

Open a Bank Account

By having a separate bank account for your towing business, you’ll be able to keep your finances organized and tidy. It’s helpful to have a checking account that’s just for your business – you won’t have to worry about keeping your finances straight between your business and personal finances.

You also need to start keeping track of your accounting. Having this information easily accessible and organized will be a real help when it comes to filing your taxes every year.

Research Industry Requirements

Don’t forget to do your due diligence in researching the requirements you’ll face at the city, county, and State levels when it comes to doing the type of towing you’re interested in. These requirements are requirements for a reason, and it could be very problematic in the long run if you aren’t following them. So, it might require a little bit of homework, but it’s worth it to know exactly what you need to know about setting up a towing business in the area you’re looking at.

Another thing – make sure the name on your trucks, DOT number (if you’re going to get one), and insurance all match perfectly.

Get Tow Truck Insurance

Insurance is another big thing you have to think about – it could be the second-largest expense your business faces, after your equipment. It’s important to be partnered with an insurance professional who knows your industry and the coverages you need. You might not need every single piece of tow truck insurance unless you’re doing a bunch of different things (rotational, roadside, etc.)

You need to get the right insurance for your business to protect yourself from the risks that you’ll face out there on the road. There are many different coverages for tow truck businesses that you’ll have to consider.

Here’s a brief overview of five common towing coverages:

  • Auto liability: This is the insurance that helps protect you if you’re at fault in an accident. It can help you cover your legal obligation to the other driver and your legal expenses.
    • Bodily injury liability helps pay for the other driver’s medical bills.
    • Property damage liability helps cover the costs of repairing or replacing the other driver’s car (or any other property you happen to damage.)
  • Physical damage coverage: This can protect you financially if your tow truck is damaged. It will help you get the truck back on the road ASAP.
    • Collision coverage can pay to repair or replace your tow truck if you’re involved in an accident or another collision.
    • Comprehensive coverage can pay to repair or replace your tow truck if it’s damaged by something other than an accident, such as fire, animal strikes, vandalism, falling objects (like trees.) It will also cover theft.
  • On-hook coverage: This can help protect the client’s car from losses like collision while you’re transporting it.
  • Garagekeepers: This can help protect your clients’ cars if you ever have care, custody, and control of them – like if you ever store them on your premises.
  • Garage liability: This can help cover your liability if the services your business provides causes property damage or bodily injury.

Not sure what coverages are right for you? We can help. Our team of tow truck insurance experts would be happy to help you with your insurance – we understand the risks you face as a tow truck operator and the coverages you need to protect yourself. You can send us a LiveChat, fill out our quote form, or call us today to get in touch with one of our experts. We’ll help you find out how much your tow truck insurance will cost.

Market Your Business

When you start a tow truck business, you have to get the word out about your business. You can launch a website and use social media to promote your business. Help your customers find you when they need a tow truck business. Let’s face it – you’ll need paying customers to get your business off the ground, right?

So, that’s the basics of how to start a tow truck insurance. There are a lot of details to consider, but don’t be discouraged. The hard work will pay off. And you’re not in it alone – our tow truck insurance experts can help answer the questions you have about your business and your insurance. All you have to do to get in touch is give us a call or fill out our online quote form – we’re here to help.


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