Operating a tow truck comes with some financial risks. That’s why getting the right insurance for your towing or vehicle recovery 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. Here’s how to weed through your options, including why you need a specific type of coverage and money-saving tips to suit your business budget.
How can I lower the cost of my tow truck insurance?
There are a number 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.
Vehicle Recovery Insurance and what’s covered
All UK businesses involved in the motor trade, in one form or another, will need motor trade insurance.
If you’re in the business of towing, delivering or recovering vehicles, you’ll need Vehicle Recovery Insurance, a variation on Motor Trade Insurance. You’re legally required to have at least a basic level of cover. In most ways, vehicle recovery insurance is much the same as your standard car insurance policy. Among standard coverage, you’ll find:
- Third party cover. This is the minimum legal requirement and covers damage to third party vehicles only.
- Third party, fire and theft cover. This covers all third party vehicles as well as fire and theft of your own vehicle
- Comprehensive Cover. This covers third party damage and fire and theft of your own vehicle, in addition to damage caused to your vehicle.
You’ll find additional policies specifically tailored to your business needs. Some of these include:
Road Risk insurance. The very basic form of all motor trade insurance. This only covers vehicles insured on the policy such as your customer vehicles.
Combined Motor Trade insurance. This includes road risk insurance and covers your personal vehicles and your customers. Your business premises will also be covered.
Car Garage insurance – This covers your customers’ vehicles while you have them in your possession, for example, parked at your shop or garage.
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, many of them rule out companies focused on repossessions only.
Others bar companies whose repossessions represent more than a specified share of their business.
If your main business is repossession, look into insurers that specialise in repossession insurance.
Do I need Liability Insurance?
While taking out Motor Trade insurance, you’ll also need to think about Liability insurance. For some businesses, it’s the law to have liability insurance, while for others, it will provide added peace of mind for their business.
There are three types of Liability insurance.
- Employer’s Liability insurance. This is a legal requirement if you employ one or more people. It protects you and your employees if you or they were to have an accident, sustain an injury or even die due to work for your business.
- Public Liability insurance. This is a optional extra. Although not required, it might be worth considering as it covers the public for accidents, injuries or death. It can also cover damage to public property caused as a result of your business activities.
- Products Liability insurance. This is mainly for mechanics or tyre fitters and covers any damage caused by the work they carry out or the parts they fit.
Even if you employ only one other person, you will need Employer’s Liability insurance – it’s required by law.
- You’ll need to find cover from an authorised insurer and that cover has to be for at least £5 million.
- You could be fined £2,500 for every day that you don’t have Employers’ Liability insurance for.
- You could also be fined £1,000 for not displaying your Employers’ Liability insurance certificate or for failing to show it to an inspector if asked.
What to look for when purchasing tow truck insurance
When selecting insurance for your tow truck or 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 car garage insurance.
But if your business includes a large volume of repossessions, you’ll need to shop around for an insurer that specialises in your business activities.
. When making a big financial decision, it's wise to consider getting independent financial advice, and always consider your own financial circumstances when comparing products so you get what's right for you.
*51% of consumers could save £303.64 on their Car Insurance. The saving was calculated by comparing the cheapest price found with the average of the next three cheapest prices quoted by insurance providers on Seopa Ltd’s insurance comparison website. This is based on representative cost savings from January 2022 data. The savings you could achieve are dependent on your individual circumstances and how you selected your current insurance supplier.