Insurance terminology can sound like gobbledegook sometimes. There are a lot of different words that get tossed around, and there are lots of different coverages that do different things. Businesses that need tow truck insurance are all different from one another – you might have a shop that does towing with a couple of trucks, or you might have a business that does only towing with a fleet. Figuring out what kind of insurance you need to make sure your business is protected can be difficult, so we’ve broken down the coverages and buzzwords that might come in handy when you’re shopping for insurance.
Liability insurance helps cover the costs that you’re legally required to pay to someone that your business has harmed in some way. With tow truck insurance, there are a few specific types of liability insurance to be familiar with.
- BODILY INJURY LIABILITY.
- Provides protection for: Bodily injury to other people that happens because of your vehicles or your business.
- Can include coverage for: Medical expenses, lost wages, and pain and suffering
- Other things to note:
- Your state decides how much liability insurance you must carry.
- Crossing state lines can affect the amount of coverage you need.
- PROPERTY DAMAGE LIABILITY.
- Provides protection for: Damage that your business/trucks do to someone’s property while the property is not in your care.
- Can include coverage for: Other people’s property – i.e., fences, cars, buildings
- Other things to note: Your policy will have a limit for how much your insurance will pay, and you can choose different levels of coverage.
- UNINSURED MOTORIST LIABILITY.
- Provides protection for: Accidents caused by a driver who does not have liability insurance.
- Can include coverage for: Medical expenses and property damage.
- Other things to note: There is also a type of coverage called underinsured motorists, which is for when an at-fault driver doesn’t have enough insurance to cover your driver’s medical bills. Underinsured motorist coverage can step in to cover additional expenses after the max has been met on the at-fault driver’s insurance.
- MEDICAL PAYMENTS:
- Provides protection for: The driver and passengers.
- Can include coverage for: Medical expenses of the driver and passenger no matter who was at fault.
- HIRED / NON-OWNED AUTO LIABILITY.
- Provides protection for:
- Hired cars: Damage caused while one of your employees is driving a vehicle that is rented or borrowed for your business.
- Cars not owned by your company: An employee driving a car not owned by your company (like their own car) for work-related reasons. This will provide liability protection if they are, for example, running errands (going to the bank, post office, etc.) for your business.
- Can includes coverage for: Bodily injury and property damage.
- Provides protection for:
Physical Damage Coverage:
Allows you to repair/replace a truck that has been damaged. Tow trucks are expensive. To make sure that your trucks have the right coverage to get them on the road again, know the following types of tow truck insurance.
*BUZZ WORD: Deductible – the amount that the insured person agrees to pay in case of a loss before the insurance company will begin to cover the rest.
- COLLISION COVERAGE:
- Provides protection from: Damages to trucks due to a crash with another object.
- Things to know: Insurance will typically pay to the policy’s limit or the Actual Cash Value of the vehicle (if the vehicle is over two years old) but you have to pay your deductible first.
- COMPREHENSIVE COVERAGE:
- Provides protection from: Damages or losses that were not caused by an accident or crash.
- Can include coverage for: Things like theft, fire, vandalism, flood/natural disaster, hitting an animal, and glass breakage.
- Other things to note: You will probably have to pay your deductible before insurance will start to cover the loss.
Garage Liability and Garagekeepers:
These are coverages that are important for tow truck businesses to consider, as they provide coverage for losses that might not be covered elsewhere.
- GARAGE LIABILITY:
- Provides protection from: Liability-related claims of bodily injury or property damage that happen because of the day-to-day work that your business does.
- Things to keep in mind: Even if you don’t have a garage, you should still consider garage liability because it can protect you from claims that come up because of the services that you do.
- Provides protection for: Cars or vehicles in your care, like at your garage or lot. When you’re responsible for a customer’s car, this helps cover you.
- Can include coverage for: Vandalism, theft, fire, etc.
- Things to keep in mind: If you live in Texas or Virginia, you might know this coverage as Storage Location Insurance, not Garagekeepers Legal Liability.
- ON-HOOK / IN-TOW COVERAGE:
- Provides protection for: Client’s car while you are towing it.
- Things to keep in mind:
- Make sure you know exactly what your in-tow coverage protects and does not protect. Sometimes there can be exclusions or gaps in coverage, and those could leave you facing a big loss that you have to take care of on your own.
- If you live in Texas or Virginia, this is what you might know as Garagekeepers Insurance.
*BUZZWORD: Cargo coverage is similar to on-hook/in-tow insurance, but has broader coverages.
- Cargo coverage is typically for auto haulers.
It’s important to remember that not all commercial auto policies are the same. Your policy should be customized to fit your business and protect you from the specific risks that you face. Your business is unique, so make sure that you’re protected from anything that life could throw your way. The towing business is risky just because of the nature of the work, but with the right insurance policy, you’ll feel comfortable knowing that what you’ve worked so hard to build won’t be destroyed by a loss.
If you have questions about any of these tow truck insurance coverages or if you want to get three free quotes, contact us today! All you have to do is fill out our quote form or call us and we’ll help you get the coverage you need.