What Do You Need to Know before Getting Tow Truck Insurance?

Tow trucks are multifaceted vehicles and are used in a variety of roles. This makes them both an asset for a towing business as well as increases the risks. It’s an asset because the same tow truck can operate as a regular towing and recovery vehicle, it can be sent to repossess a vehicle and be part of an auto repair shop among others. So, it opens up more than one avenue of making money, but this multifaceted nature can also potentially put tow trucks in risky situations. For example, in case of tow trucks, the cargo is another vehicle which is a risk in itself.

Hence, you need insurance for your tow trucks, but do keep in mind that depending on the level of risk and nature of jobs it carries out, the insurance cost will increase. An independent insurance agency like East Insurance Group can provide you with multiple quotes and help you find the right insurance fit for your towing business.

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Components and Costs of Tow Truck Insurance

There are four major components in tow truck insurance. Let’s take a look at these first and then we will also discuss the other smaller components.

Business Auto Insurance

This works as the layer of protection for your towing business in case of an accident or theft. It also covers injuries and damages caused by your tow truck with one of your employed or contracted drivers at the steering. It starts as low as $300,000 and goes up to $1 million.

Garagekeepers Insurance

This is another vital component. It provides liability coverage to your towing business for any damage caused to a client’s vehicle while it’s under your charge. So, if a client’s vehicle gets damaged while being repaired or while it’s in storage in your premises, garagekeepers insurance coverage protects you. $500,000 is the typically coverage for garagekeepers insurance.

Business Liability Insurance

This is similar to commercial general liability insurance. It protects your towing business from possible claims arising from injuries to people outside the company and/or damages to third-party properties, inflicted in the course of running your operation. Without this protective layer in place, you might end up paying a lot of settlement or compensation money if the claims are successful. It ranges from $1 million to $3 million. Thoroughly assess your business operations, discuss with a lawyer or at the very least your insurance broker before deciding on a figure.

On-Hook Insurance

This is another form of liability insurance and somewhat similar to garagekeepers insurance. As the name suggests, a towing business will primarily be towing a vehicle from point A to point B. So, while a client’s car is hooked onto your tow truck, any damages caused is covered by on-hook insurance. $250,000 is the standard coverage.

Besides these four major coverages, you should also consider getting uninsured/underinsured motorist coverage, personal injury protection coverage, medical expenses and workers’ compensation coverage. In most states workers’ compensation is mandatory by law for employees. In case of independent contractors, it is best advised that you get either one of medical expenses coverage, personal injury protection coverage or occupational accident insurance. You could bundle them with your primary insurance policy to lower your overall premium.

Finally, uninsured/underinsured motorist coverage protects you in case your tow trucks meets an accident with a motorist who doesn’t have adequate insurance. You will have to shell out a few extra dollars now, but when your tow truck does meet an accident with such a motorist you will end up saving a lot of time and hassle.

Factors That Determine Insurance Cost

Five main factors have a direct impact on the cost of insurance.

  • Location: If your business is located in an accident prone zone, then you might get more business, but it also means that your tow trucks are also more likely to meet an accident. So that would increase the cost of insurance.
  • Type of Tow Truck: Tow trucks come in all shapes and sizes. The greater the value of the tow truck, the higher the cost of insurance.
  • Operational Hours: If your business is operational 24/7 versus if it is open for the standard office hours.
  • Services: If you offer repossession services that would definitely increase the cost of insurance, because of the inherent risks involved in it. Similarly, if you tow high-end cars, then the liability attached to your business is greater, which in turn increases cost of insurance.
  • Safety Programs: Do you have the state recommended safety programs in place?

Towing is a lucrative business, but if you don’t insure your business against any major fallouts, then you might be forced into spending a lot of your hard earned money in damage control. A qualified insurance broker with expertise in the towing industry will be able to help you navigate through the processes involved in buying the right insurance policy. At East Insurance Group, our agents are just a phone call away and available 24/7 for your assistance. Give us a call today for a quote.