What kind of coverage do I need if I do repo work?
You might be wondering why lots of insurance carriers aren’t crazy about working with tow truck companies that do repossession work. You might find that insurance carriers either don’t want to write your company or that your premiums are extremely high. The reason is that if you do repos, you’ve got much more risk than your fellow tow truck businesses.
There are voluntary repossessions, in which the owner knows that their car is going to be taken and allows you to do it. Easy. And then there are involuntary repos, in which the owner does not want to have their car taken away. Not so easy.
So, yes, repo involves lots of risks. Some of those risks include:
1. Angry people.
Let’s face it - most people won’t be happy about having their car taken away because they couldn’t make the payment on it. People get mad, which means that your drivers might be at risk of assault or injury because someone gets angry about them taking their vehicle. To avoid the angry-person scenario, your drivers might have to do a bit of cloak-and-dagger repo work in the middle of the night, putting themselves at risk.
2. Wrongful Repossession.
There are a few ways that your business could get in trouble for wrongful repossession of a car. It seems like a long shot, but it actually happens more than you might think. Your business could find itself in an awkward situation if…
You don’t check with the bank before taking a car.
By the time that you get the request to pick up a car, the owner might have made their payment. If you don’t check first, you might end up taking a car that’s owner has made the payment. That probably wouldn’t go over well with the owner.
You take the wrong car:
Oh, you meant the other blue sedan, not the one that’s currently hooked up to my truck? Whoops.
Make sure that you do your due diligence and check that you're taking the right car before you hook it up and drive away with the vehicle. You’d be in real trouble if you take a car from someone who has nothing to do with the repo job that you were given.
You don’t have a written notice:
Any repos must be done after a written order has been received from the bank. If you only have a verbal or spoken agreement with them, you’re opening yourself up the risk of wrongful repossession.
Fortunately, for these scenarios there’s wrongful repo insurance - we’ll talk about that in a bit.
The goal of a repo might be “get out as quick as possible.” As a result, you might be in the habit of grabbing the car, wheeling away, and then stopping to secure the car when you’re a safe distance from the scene of the repo. This could lead to some mishaps if the car doesn’t want to stay put until you put the chains on.
Yes, there are lots of risks involved with repos, and yes, it can make it more difficult to find insurance. Fortunately, we know where we can find you the best deal on your insurance. We work with carriers that will insure you even if you do repos. So not to fear - we can help you no matter what kind of tow business you have! Tell us a bit about your business and we’ll help you find the right coverage to protect you from all the risks you face.
What’s wrongful repo insurance?
Wrongful repo insurance can help you if you somehow manage to repo a car that you’re not supposed to. For example, say you get a request from the bank to take the car. The request took a couple days to get to you, though. You head out, repo the car, and congratulate yourself on a successful job. But then the owner of the car complains because they made their payment in the time that it took the request from the bank to get to you. You forgot to call the bank first to check if they still needed you to take the car. Uh oh.
How much does tow truck insurance cost if I do repos?
Well, here’s the thing. Depending on what percentage of repo you do, your insurance rates will go up. If you’re less than 5% repo, your rates will most likely stay the same. But if you’re over 50% repo, you’re most likely going to be treated like a company that’s exclusively repo. And in that case, you’re probably looking at an increase in your rates over what you’d pay if you didn’t do repo.
To make sure that you get an accurate rate for your insurance, you have to check that you’re calculating your “repo percentage” correctly. Use the number of jobs that you do, not the total income that you earn from each type of job. For example, if you do ten jobs in a month and two of those are repos, your repo percentage would be 20%. Insurance companies use the number of jobs instead of the income earned because it provides a more accurate reflection of how much repo you do.
In the end, it all comes down to risk. Repos are riskier than regular, side-of-the-road tows, so that’s why your insurance rates might be higher. But we can still help you find the best insurance at the best possible rate. All you have to do to get some quotes is fill out our online form or give us a call today.
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