If you’re getting into the towing world, you might be wondering what kind of insurance you need for your tow truck or wrecker. Insuring a tow truck is different than insuring a personal vehicle, and there are some important coverages to consider and questions to ask yourself. Although towing insurance might seem overwhelming at first glance, we’re going to break down six towing insurance coverages you might want to consider for your wrecker or rollback.
Towing insurance coverages for your truck
1. Auto liability insurance.
Auto liability insurance can protect you by taking care of your legal obligation to the other driver if you’re involved in a car accident. If you’re at-fault in an accident, you could have a big financial responsibility to the other driver.
There are two main components of auto liability insurance:
- Bodily injury liability (BI) – Bodily injury liability can cover the costs of the other driver’s medical bills and lost wages if you injure someone in an accident. It can also help you cover legal expenses if the driver decides to sue.
- Property damage liability – Property damage insurance can help you cover the costs of repairing or replacing the other driver’s car (and other property you happen to destroy) if you’re involved in an accident.
Pro tip: Your state probably has a minimum limit of liability insurance that you’re required to carry in order to operate your towing business. You also might have to carry a certain amount of liability insurance to satisfy the requirements of your towing contracts. Be sure to be familiar with these requirements and convey them to your agent when you’re getting your insurance quotes.
2. Physical damage insurance.
Physical damage coverage is the towing insurance that can take care of repairing or replacing your tow truck or wrecker if it’s damaged. It’ll help you get your truck back on the road ASAP if something happens to it.
The two main parts of physical damage insurance are:
- Collision coverage: This can take care of the expenses of repairing or replacing your truck if you get into an accident or collide with something.
- Comprehensive coverage: Comprehensive coverage can pay to repair or replace your tow truck if it’s damaged by something other than a collision. Comprehensive insurance often covers losses like fire, animal strikes, falling objects (i.e. trees), and vandalism. It can also cover theft if your truck is stolen.
This coverage is important because your liability insurance will not pay to repair your tow truck if it gets damaged. To protect your investment in your vehicles, physical damage insurance is a good idea. It ensures that you’ll be able to get your tow truck back to work as soon as possible.
3. Garagekeepers coverage.
(If you live in Texas or Virginia, this is what you would know as storage location insurance.)
Garagekeepers insurance covers your customers’ cars if you ever have them in your care, custody, or control. For example, if you store clients’ cars on your premises for any length of time, you would have care, custody, and control of the vehicles. You’re responsible for that customer’s car, so if it gets damaged while it’s in your care…Well, you can see where this is going. You could be on the hook.
Garagekeepers insurance typically covers losses such as fire, vandalism, lightning, and theft.
Sample scenario: You get a towing call in the middle of the night. The customer’s mechanic is not open because it’s late, so you have to take the car back to your storage lot until morning. After you drop the car off at your lot, a fire breaks out and destroys the car.
4. On-hook/In-tow coverage:
(If you live in Texas or Virginia, this is what you would know as garagekeepers insurance.)
On-hook/In-tow insurance can cover you while you’re transporting the client’s car and the vehicle is hooked up to your tow truck. Again, since the customer’s car is your responsibility during the tow, you would be liable if something happened to the vehicle during transport.
Pro tip: You may be required to carry a certain level of on-hook/in-tow coverage in order to operate your business. Check the requirements for your state.
Sample scenario: You’re towing a car to an auto repair shop. On the way, you get into an accident and slide off the road into the ditch. Fortunately, everyone is fine, but the client’s car is all smashed up. With on-hook coverage, your towing insurance could cover it.
5. Garage liability insurance.
Garage liability insurance can protect you from liability that arises due to the day-to-day operations of your business. Basically, that means it can help cover your legal responsibility if the services you provide result in bodily injury or property damage.
Even if you don’t have a garage, you might want to consider garage liability. Let’s take a look at our sample scenario to find out why…
Sample scenario: You’re on a roadside assistance call and you change a tire. The customer thanks you and drives away. A mile down the road, the tire falls off the car and the driver gets into an accident. You could be on the hook because you’re the one who changed the tire.
6. Wrongful repo insurance.
Wrongful repo insurance is important for towing businesses that do repossessions. It can protect you in case you unintentionally repossess a car that you’re not supposed to. For example, you could have a “wrongful repo” problem if…
- You don’t check with the bank before taking the car. It can take a few days for the repo request to get from the bank to you, and in that time, the owner of the vehicle may have made their payment. You need to double check with the bank before taking the car.
- You take the wrong car. Accidents happen, right?
- You don’t have a written notice. A verbal or spoken agreement with the bank is not enough. You need to have the notice in writing.
There are a lot of towing insurance coverages out there. The above are common coverages we see for towing businesses, but every business is different. That means that each business needs a customized insurance plan. We can help you get tow truck insurance that’s tailored to your business and your insurance needs. We’ll shop your rates so you know that you’re getting the best coverage at the best rate. To get started with some tow truck insurance quotes, all you have to do is fill out our online quote form or give us a call today.