On-Hook Insurance: Cost, Benefits, & Who Needs It
There’s a reason our truck and van clients consistently send their friends to us for their on-hook insurance, they know we’ll work to get their tow trucks the best coverage possible. Here’s what you need to know about on-hook insurance.
What Is On-Hook Coverage?
Frequent users of automobiles know that accidents or repairs can happen at any time. A flat tire, an overheated radiator, or a dead battery are all common occurrences that could leave drivers stranded in places with no immediate help available.
As the owner or operator of a towing business, you may have to tow the car to the nearest service station or garage. However, what if the damage to the car worsens because of the towing? Or what if new dents and scratches are formed because of the towing?
Well, that’s exactly why on-hook towing insurance exists. This insurance policy, one of the many automobile insurance policies, protects not the towed vehicle, but the towing vehicle instead.
Simply put, it protects the towing business in the case of damage during the towing process, or while the vehicle is being towed. Thus, any damage caused in such a case will be covered and paid for because of the on-hook towing insurance.
Benefits of Having On Hook Insurance
On-hook towing insurance basically helps to pay for the repairs or even replacement of a damaged vehicle that you are towing but do not own if it is damaged. In contrast, it is being towed by causes such as collision, fire, theft, vandalism, or an explosion.
It is important to note that in the states of Texas and Virginia, on-hook coverage is called “garage keeper’s legal liability” coverage. In contrast, the actual garage keeper’s legal liability is called “storage location insurance.”
Do I Need On-Hook Towing Insurance?
If you own or operate a business that offers towing or hauling services, then, yes, you do need on-hook coverage. This insurance will help ensure that your business is protected from lawsuits or damage claims if a third-party vehicle is damaged during hauling or towing. Without this insurance, it can get expensive to foot the repairs or replace the vehicle with your own funds. On-hook coverage ensures that such a case does not occur by covering and paying for all the damages or replacement, as the case may be.
How Do Limits and Deductibles Work With On Hook Insurance?
With on-hook insurance, the client selects both the limit and the deductible. This limit will be the maximum amount paid per time or event a third-party vehicle is damaged while towing. The deductible amount is the amount that you, as the business owner, will pay towards the repairs or replacement of the damaged vehicle before your insurance company kicks in and pays you. Therefore, if you pay now, you will be reimbursed by your insurance company once all the processes are through.
The maximum limit for on-hook coverage can be anywhere between $10,000-250,000. If your business tows only vehicles of low value, a limit of $10,000 is sufficient. However, the higher the value of the vehicles, the higher the limit, but the higher the limit, the more premium you pay. Therefore, consider all factors carefully and strike a balance between them based on the facts. It is best to have a limit of medium value as, in that case, you won’t end up paying extra from your own pocket if unanticipated expenses arise.
What Does On Hook Insurance Cover?
On-hook insurance coverage protects other people’s vehicles hooked up to your tow truck when they are damaged by:
On-Hook Coverage vs Garagekeepers Insurance
Sometimes, on-hook insurance and garagekeepers coverage are confused with one another. Garagekeepers insurance covers other people’s vehicles when they’re stored on your property. In Virginia and Texas, on-hook insurance is referred to as “garagekeeper’s insurance.”
If you live in one of these states, it might be a good idea to ask your insurance agent about these two coverages as people often get confused (in these two states, garagekeeper’s insurance is called “storage location insurance”).
How to Get the Right On-Hook Insurance for Your Business
There are several ways to get the right on-hook insurance or not for hire tow truck insurance for your business. Let’s look into some of them:
Customize Your Policy
It’s completely up to you to choose a limit and deductible that will fit the specific needs of your business.
Customize Your Payment Plan
Insurance companies can be pretty flexible when it comes to payment plans. In other words, you can choose if you want to pay monthly, quarterly, or yearly. Remember that the more you pay upfront, the lower your premium will be.
The best way to get a good deal on your on-hook towing insurance policy is to look for at least 3 quotes before you make the final decision. The more companies you check, the more likely you will find the best one!
A Real On-Hook Insurance Example
A customer called a towing service because they couldn’t start their car. The tow truck picked them up and stopped to refuel the truck. While leaving the station, the truck accidentally scraped the car, which resulted in a large scratch on the passenger side door.
In this case, the $15,000 on hook towing limit with a $500 deductible the towing company selected covered repairing damage to the passenger door. The towing service paid $500 for the repairs, and on-hook insurance covered the rest.
Restrictions and Exceptions to On-Hook Insurance
First and foremost, in order to be able to purchase or be eligible for on-hook towing insurance, towing business operators need to have purchased hook liability insurance (an insurance policy that pays for damage done to third parties by you). Anyway, liability insurance for the automobile industry is a requirement by law in most American states, which means if you’ve complied with the laws of your state (if they demand liability insurance), you’re already eligible for on-hook towing insurance.
However, it is important to remember that if one of the vehicles in the towing business is insured with a particular limit and deductible, all the vehicles in the fleet will be insured at the same limit.
Additionally, on-hook towing insurance is only available for certain businesses or types of organizations, such as:
- Service stations
- Towing businesses
- While driving trucks on a hired basis
This means that on-hook coverage is unavailable for the following types of businesses:
- Transporting vehicles that are owned either by you or your business
- Towing or hauling antique boats, race cars, or antique cars for your personal use
- Towing or hauling your car behind your mobile home
The Average Cost of On-Hook Coverage
Generally, on-hook coverage is bundled with your business auto liability insurance, forming quite a significant part of it. On average, monthly premiums for the whole bundle can be anywhere between $350-800.
Different factors contribute to the final cost of your on-hook coverage, such as:
- The nature of your business
- The number and types of tow trucks you own
- Their age
- How much you make
- The kind of vehicles they are used to tow
Therefore, on-hook towing insurance doesn’t have a set price. However, not all insurance companies give the same importance to the same factors. One company may give importance to the number of trucks you own over their make or model, while it may be vice versa with another.
Thus, the trick to cutting insurance costs is shopping around for quotes before settling on one. Insurance companies that deem your business as less risky will give you better quotes, so ensure that you bring down your risk factors by training your drivers to stay safe, preventing accidents as much as possible by being cautious, and teaching your employees safety procedures.
Also, bring up your deductible amount, maintaining it at at least $500 or even $1,000 to reduce your premium.
What Is on Hook Coverage for Tow Trucks?
On-hook coverage for tow trucks will insure the vehicle against accidents when moving with another vehicle attached to the hook. As someone who runs a tow-truck business or a driver, this type of insurance will offer you outstanding protection.
On top of protecting the tow truck, the insurance entails protection for the vehicle being towed. So, even if an issue were to happen to the being-towed vehicle, you would not have to worry about it as the tow truck owner.
On-hook coverage for tow trucks will also offer the best protection for third-party damage, among other points. This type of insurance package is available for towing businesses, trucks on a hired basis, and service stations.
Is On-Hook Coverage the Same as Cargo?
On-hook insurance is also often confused with cargo insurance. Unlike cargo insurance which protects any personal items left inside a towed vehicle, on-hook insurance only covers the vehicle itself. It doesn’t cover purses, cell phones, and other personal belongings from physical damage, theft, or vandalism.
Does Garagekeepers Cover On-Hook?
No. Garagekeepers insurance covers damages that happened while the vehicle was on your property. On-hook insurance covers all the damages that occurred during the hauling.
Am I Required to Have On-Hook Insurance?
The requirements for on-hook insurance vary from state to state, so you should check with your insurance company about the requirements in your state. You might be required to carry at least a minimum amount of on-hook insurance to operate your business.
Are you still confused about on-hook insurance, or do you need some help with getting a quote for your business? Contact us today and get all the information you need fast and for free!
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