Tow truck insurance can, admittedly, get a little complicated. There are a lot of things to know about tow truck insurance and a lot of different coverages out there for towing operations. Buying tow truck insurance can seem very overwhelming. There are a lot of questions and numbers and insurance vocabulary words being tossed around. To help you through the truck insurance buying process, we’ve put together a list of nine common mistakes people make when buying tow truck insurance.
Avoid these tow truck insurance mistakes.
1. Forgetting to ask about discounts.
There are many insurance discounts out there, so it’s important to ask your agent if you qualify for any discounts on your rates. Every insurance carrier tends to offer their own discounts, so you never know what you could find. Don’t forget about the potential savings you could gain because you’re eligible for a discount.
2. Setting your deductible too low or too high.
Your deductible is the portion of a claim or loss that you agree to pay – basically, you have a chunk (let’s say $1,000) and the insurance company has their chunk (the rest of the cost of the claim, up to the policy’s limit.) If you have a $6,000 claim, you would pay $1,000 and the insurance company would pay the remaining $5,000.
Okay, that being said, it’s important that you choose a deductible that’s not too high and not too low. The higher your deductible, the lower your premium. Choosing a higher deductible can help you save money on your tow truck insurance rates because you accept more risk and you’re less likely to file a small claim (since chances are it wouldn’t be worthwhile to do so.) However, it’s important that you don’t set your deductible so high that it would be financially burdensome or devastating for your business to pay if you have a claim. You have to think about how much you could comfortably afford for a claim.
3. Not checking out the carrier.
It’s important to do some research about the company you’re considering. Insurance is a big deal, so you want to make sure that the carrier is reputable. You want to make sure that the insurance company will truly be there for you in the event of a claim.
4. Not asking about payment options.
There might be different ways that you can pay for your insurance. Be sure to inquire about what kind of payment options the carrier offers – many companies offer different ways to pay so that businesses can pay for their insurance while staying within their budget. (But keep in mind that some companies may offer a discount if you pay for your policy in full.)
5. Skipping garage liability coverage.
Even if your towing business doesn’t have a physical garage, you may still want to consider garage liability insurance. Garage liability can help cover you for the costs you’re obligated to pay if your business causes someone bodily injury or property damage because of the services you provide.
Let’s say you get a roadside assistance call to change a tire on someone’s car. The driver thanks you and sets off. They get two miles down the road and the tire comes off, causing the driver to get into an accident. That’s where garage liability comes in – it can help cover the costs that you’re legally obligated to pay to the driver.
So, as you can see, just because you don’t have an actual garage, you might still need to give garage liability some consideration.
6. Thinking that your auto liability coverage covers your truck.
Your auto liability insurance will only cover the other driver’s car and the other driver if you’re in a car accident. It may cover the driver’s medical bills, pain and suffering, and their lost wages, and it can also cover the costs of repairing or replacing their car (or other property you might damage.) Your tow truck, however, is not covered under auto liability.
In order to get your tow truck back on the road as soon as possible, you would need to purchase physical damage coverage, which is made up of two parts: collision coverage and comprehensive coverage. Collision coverage covers your truck if you’re in an accident or if you hit something, while comprehensive coverage covers losses like vandalism, theft, fire, or falling objects (like trees.)
So. In order to get your truck repaired or replaced and on the road again following an accident or loss, you would need physical damage coverage.
7. Calculating your repo percentage based on income.
If you’ve ever gotten tow truck insurance, an agent has probably asked you what percentage of your business is repo. It’s important to calculate your repo percentage based on the number of tows you do, not the income that comes from each type of tow. Insurance companies go by the number of tows because repos often pay more than normal tows, so using your income would not give an accurate idea of your repo percentage. Anyways, that basically means that if you do 50 tows in a month and 7 of those are repos, your percentage would be 14%.
8. Not reading through the policy thoroughly.
Yes, it’s a lot of pages. But it’s important for you to read through the policy so you know exactly what is and is not covered. Getting a nasty surprise if something you thought was covered isn’t would be no fun at all.
9. Not shopping for the best rate for your insurance.
Insurance isn’t always super fun. So, it’s completely understandable that you would want to get it over with and just go with the first policy you can find that sounds reasonable. But by shopping for your rates you can save money on your tow truck insurance rates. It’s a good idea to compare coverages and compare rates from different companies – you might find a better rate for the same coverage that way. So, though it may be tempting to do so, don’t commit to the first policy you find.
If you want to shop for your rates and get multiple quotes for tow truck insurance, our team of agents would be happy to help. We’ll shop your rates for you and come back with some quotes. We’re tow truck insurance experts, so we understand the risks you face and the coverages you need to protect you from them. All you have to do to get those quotes is fill out our online form or give us a call today.