Coverage from Agents Who Know Trucks
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 end up leaving drivers stranded in places where there is 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 among the many automobile insurance policies that exist, 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.
What Exactly Does On-Hook Towing Insurance Entail?
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 while 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, while 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. Having this insurance in place will help ensure that your business is protected from any lawsuits or damage claims if a third-party vehicle is damaged during hauling or towing. Without this insurance, it can get pretty expensive to foot the repairs or replacement of the vehicle from 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 Here?
With on-hook coverage, the client selects both the limit and the deductible. This limit will be the maximum amount that can be paid per time or event that a third-party vehicle is damaged while towing. The deductible amount is the amount that you as the owner of the business 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 in case unanticipated expenses arise.
Restrictions and Exceptions to On-Hook Coverage
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 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, their make, and 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 down on insurance costs is to shop around for quotes before settling on one. Insurance companies which 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.
On-hook towing insurance can be really helpful if you own or operate a towing business. Without it, it can get pretty expensive footing damage and replacement bills. As cautious as you may be, accidents can happen, so insure your business. Remember, better safe than sorry!
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