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

The number of cars on our roads are increasing year-on-year, which increases business for tow truck companies. Add to that the fact that over the past few years erratic weather conditions often leave vehicles stranded, requiring assistance of a tow truck to pull them to safety. This makes the tow truck business a lucrative one, but at the same time these same issues increase the risks associated with the business as well.

The increase in number of cars has also led to a spurt in accidents and truck drivers, including tow truck drivers, have been found to be particularly prone to being involved in accidents – not necessarily because of their own fault. In fact, a report by the United States Department of Labor’s Bureau of Labor Statistics informs that in 2012 truck drivers across the country were found to be more prone to fatalities, injuries and illnesses than any other worker in the private sector.

There is an additional risk in New Jersey. It’s related to how towing companies are perceived in the state. Certain unscrupulous towing companies had been engaging in predatory towing. This led to the New Jersey Office of Attorney General’s Division of Consumer Affairs amending the Predatory Towing Prevention Act to curb this practice. While this won’t have a direct impact on your business, it’s nonetheless wise to ensure that your insurance policy protects you from any external claims or lawsuits.

Mandatory Liability Coverage

New Jersey’s Department of Banking and Insurance makes it mandatory for all tow trucks to have certain mandatory liability coverage.

Commercial Auto Liability Tow Truck Coverage

This is mandatory for all tow trucks in New Jersey. This provides liability coverage against bodily injury and property damage. You need to get minimum $750,000 coverage per tow truck that is categorized as light/medium duty truck (gross weight below 32,000 lbs.) While for tow trucks categorized as heavy duty (equal to or above 32,000 lbs.), you need to get minimum $1,000,000 coverage per truck.

Garage Liability Insurance

Garage liability insurance also provides protection to your business from any loss due to bodily injury or physical damage during the course of day-to-day operations. It is essentially an umbrella policy that is useful in plugging any gaps left in your commercial general liability insurance. You have the option of only buying a commercial general liability insurance, but you need at least one as it’s mandatory in New Jersey. In either case, the coverage needs to be a minimum of $300,000.

Garagekeepers Insurance

Do you store client vehicles overnight either for safekeep or to offer additional services? If you do have a storage garage, then you’re mandatorily required to also get garage liability coverage. It protects your business from losses incurred in case a client’s car is damaged or vandalized while in storage. You need a minimum of $50,000 coverage.

Do keep in mind that unless your insurance policy includes these mandatory liability coverages, you will not be able to register your tow truck with the New Jersey Motor Vehicles Commission.

What Other Tow Truck NJ Insurance Coverage Do You Need?

  • Workers’ Compensation: Your drivers are an important asset to your business. You need to provide them with certain protections as well. The workers’ compensation coverage, which is mandatory for direct, permanent employees in most of the states, in one such way. In case the drivers meet with an accident while doing their job and get seriously injured, the workers’ compensation coverage will provide them with weekly compensations along with other benefits. Here’s a guide from the New Jersey Department of Labor and Workforce Development for your perusal.
  • Occupational Accident Insurance: You have the option of including independent contractors working for you in the workers’ compensation coverage, but that’s not mandatory. You can instead opt for an occupational accident insurance. It offers greater flexibility in terms of the limit of benefits you would like to offer your contractual workers. However, make sure you have some sort of an insurance coverage for both disability benefits and medical expenses for contractual workers as well, because otherwise they could file claims against the business costing you a lot more.
  • On Hook Towing Insurance: This is a must for all tow truck companies. Every so often mishaps are likely to happen while one of your tow trucks is towing a client vehicle. In order to protect your business from the fallouts of such mishaps, you need on hook insurance. It will protect you in case there’s a collision, or maybe an unexpected bout of hail damages the vehicle’s chassis, or if there’s an incident of vandalism.
  • Uninsured/Underinsured Motorist Coverage: This isn’t mandatory and is often ignored. It’s purpose is to protect you in case your tow truck meets an accident with a motorist without proper insurance. Regular physical damage coverage won’t cover this and you will end up paying from your own pocket. So, it’s better to spend a few extra dollars now.

 

As an independent insurance agency, East Insurance Group will be able to offer you quotes from multiple insurance companies and help you find the right coverage plan for your business. Our expert in-house agents are just a phone call away. Get in touch today and get a free quote.