How to Start a Tow Truck Business

So, you’ve decided to take the plunge and start your own tow truck business—awesome! Owning your business means you’re in charge of your destiny, and you get to enjoy the freedom that comes with it. But remember, it’s not all smooth sailing. You’ll need to be ready for long hours, working through rain or shine, and some serious hustle. A typical day? You’re driving to a stranded car, hooking it up, hauling it to its new spot, unloading, and then hitting repeat. If this sounds like the life for you, you’re probably eager to know how to get your tow truck business rolling.

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 kick off your tow truck business, you’ll want to set it up as a legal entity. This just means making your business official, which is important because it separates your personal stuff from your business operations. If anything goes wrong and insurance doesn’t cover it, your personal assets like your house or savings won’t be at risk.

It’s also a good idea not to operate just under your own name. Creating a legal entity not only protects you financially, it also makes your business look more professional. Clients tend to trust a business more when it’s set up properly like this.

Get Your Taxes Sorted Out

Ah, taxes—can’t overlook those. Before you start hauling cars with your tow truck business, you’ll need to sort out your tax situation. It’s important to file the right taxes from the get-go. Consider teaming up with an accountant. They can handle the complex tax forms and paperwork for you, so you can focus more on your business and less on the bureaucratic stuff.

Open a Bank Account

It’s a smart move to set up a separate bank account for your towing business. This way, you can keep your business finances neat and separate from your personal money. Having a dedicated checking account for the business means you won’t have to untangle personal and business expenses later on.

Also, start keeping good track of your accounting right from the start. Keeping everything organized and easily accessible will save you a ton of stress when it’s time to file taxes each year.

Research Industry Requirements

Before diving in, take some time to look into the local, county, and state rules for towing where you want to set up shop. Getting this right from the start is key to avoiding headaches later on. Sure, it’s a bit of homework, but it’s totally worth it to make sure you’re on the up and up.

And here’s a little pro tip: double-check that the name on your trucks, any DOT number you might need, and your insurance info all match perfectly. It’s one of those little things that can save you a lot of trouble later.

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 professionals 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 professionals. We’ll help you find out how much your tow truck insurance will cost.

Market Your Business

When you kick off your tow truck business, spreading the word is key. Consider launching a website and hitting up social media to boost your visibility. You want to make sure customers can find you exactly when they need a tow. After all, you need paying customers to really get your business rolling, right?

That’s a quick rundown on starting up a tow truck business. Sure, there are lots of details to iron out, but don’t let that get you down. The effort you put in now will definitely pay off later. Plus, you’re not doing this alone—our team of tow truck insurance pros is here to help answer any questions you have about your business and insurance needs. Just give us a call or fill out our online quote form. We’re here to lend a hand.

Additional Resources




We can help you save on your tow truck insurance.





Leave a Comment