Compare the cost of tow coverage to cover your business needs.
Operating a tow truck comes with some financial risks. That’s why getting the right insurance for your towing company is vital: You’re on the hook for protecting not only yourself and your truck, but also anything else that you’re towing behind it.
Big responsibility comes with many types of coverage. And because towing insurance is considered commercial coverage, it can be among your major business expenses.
Here’s how to weed through your many options, including why you need a specific type of coverage and money-saving tips to suit your business budget.
Average cost of towing insurance
|Type of business||Average monthly cost per truck|
|Auto repair or body shop||$625|
Your actual cost will vary depending on your insurance provider, the amount of coverage you need, where you live, your credit score, your truck make and model, among other factors.
How can I lower the cost of my tow truck insurance?
There are a multitude of tow truck insurance options. You won’t need every one, so it’s a matter of eliminating the ones that aren’t essential to your business.
Try not to skimp on coverage you might need. It could end up costing you more out of pocket in the long run if you’re not protected against all situations you might encounter in your business.
You can keep the cost of your insurance low by thinking critically about the people representing your company behind the wheel. Navigating the roads while towing often heavy loads requires skill. Make sure that your tow truck operators are experienced and have a proven history of safe driving.
Tow trucks used for repossession
If you own a business that’s involved in repossessions, you might have to jump through a few extra hoops for coverage. Because providers consider repossessions riskier than simple towing — what with the possibility of wrongful repossession and driveaways — many of them rule out companies focused on repos only.
Others bar companies whose repos represent more than a specified share of their business. Big names like Progressive, for example, won’t insure commercial towing companies that generate more than 24% of their revenue from repossessions.
If your main business is repossession, look into insurers that specialize in repo insurance — like ATIG.
What does tow truck insurance cover?
In most ways, towing insurance is the same as your standard auto insurance policy. Among standard two truck insurance coverage, you’ll find:
- Liability insurance. The most basic type of insurance covering damages you might cause to other people or their property. Liability insurance includes:
- Bodily injury. If your truck injures another person, this covers what you’re legally obligated to pay.
- Property damage. As the name implies, covers damage you might cause to someone’s property.
- Uninsured motorist insurance. Covers your expenses if you are involved in an accident with a driver who doesn’t have insurance or sufficient insurance to cover the damages.
- Collision insurance. Covers damages to your truck stemming from an accident.
- Comprehensive insurance. Protects your truck from damages caused by something other than a collision with another car, like fire, theft and vandalism.
- Medical payments insurance. Pays for your medical expenses and those of your passengers that result from an accident in your truck.
For your towing company, you’ll find additional policies specifically tailored to your business needs, including:
- Garagekeepers insurance. Legal liability that covers your customers’ vehicles when they’re in your possession and parked at your shop or garage.
- On-hook towing insurance. Covers your customers’ vehicles against colission, vandalism and more while you’re towing them.
- Wrongful repossession insurance. Professional liability that protects your company against negligence or failure to render your services during a repossession.
- Hired and non-owned auto insurance. Sometimes called “driveaway liability insurance,” protects your drivers from damages and injury when they’re driving a customer’s car.
What is a tow truck insurance filing — and does my state require one?
A tow truck insurance filing is simply proof that your tow truck meets your state’s minimum insurance laws. In states that require insurance filings, your commercial insurance provider will file this proof on your behalf.
Only a small handful of states require a tow truck insurance filing, and each specifies what your filing should include:
- Colorado. Depending on your towing business, your insurance provider files Form 12 or Form 14 to prove you’ve purchased sufficient liability insurance and on-hook insurance.
- Montana. Your provider files Form MV5 COI, proving that you’ve purchased sufficient liability insurance, on-hook insurance and, if you tow vehicles to a storage or repair facility that you own, garagekeeper’s legal liability insurance.
- Oklahoma. To prove that you’ve purchased sufficient liability insurance, your commercial insurance company files the WA Form with the state.
- Texas. In the Lone Star State, your insurance provider files Form T, guaranteeing you’ve purchased sufficient liability insurance.
What to look for when purchasing towing insurance
When selecting insurance for your tow truck, keep in mind your business and its needs. If you only deliver towed cars to other businesses, with no possibility of storing vehicles at your own garage or shop, you might not need garagekeepers insurance.
But if your business includes a large volume of repossessions, you’ll need to shop around for an insurer that specializes in your business activities.
To get the exact coverage you need for your business at a price that fits your bottom line, use our comparison table to narrow down your options.
Frequently asked towing insurance
Am I required to have tow truck insurance?
Yes. At a minimum, you’ll need to purchase liability insurance. You may also need on-hook insurance or garagekeepers insurance to legally conduct your business. Confirm legal requirements with your state’s DMV or your commercial insurance provider.
Do I need to file paperwork with my state to prove I’m covered?
Only if you live in Colorado, Montana, Oklahoma or Texas. These states require two truck insurance filings, whereby your commercial insurance provider files paperwork on your behalf to prove you’re sufficiently covered.
Are my medical expenses covered if I’m injured in an accident?
Only if you pay for medical payments coverage, which is optional — though highly recommended to protect your business’s bottom line.