Are you starting a tow truck business? Have you had a tow truck company for a while now and are wondering what your options for insurance protection are? Either way, there are some crucial pieces of information that all tow truck company owners and operators need to understand the risks of the business.
There are many reasons why people purchase tow trucks. Garage services often have towing vehicles, unless they subcontract their towing service. Some truck owners work as independent contractors, some have a fleet of trucks and run a towing business, and some purchase them to tow their commercial vehicles if roadside assistance is needed. If you own a tow truck or are considering purchasing one, tow truck insurance is a necessary purchase.
Commercial Tow Truck Drivers Face Many Hazards
- The National Highway Traffic Safety Administration (NHTSA) reports that tow truck drivers face occupational injuries and fatalities at twice the national average
- The most common injuries are caused by being hit by other cars on the road
- Operators can be injured by jagged edges and broken glass when loading wrecked cars for towing
- Tow trucks are most frequently called into service on days that weather conditions make driving conditions hazardous
- Drivers who work in the impound or repossession industry have special risks, such as confrontations with vehicle owners
What Is Tow Truck Insurance?
As a tow truck owner, you face some of the same concerns as owners of other commercial vehicles, as well as some unique risks. Tow truck insurance companies understand these risks and provide wrecker insurance policies that include several different coverage options. With these options, you can build a policy that will adequately meet your distinctive needs.
Commercial tow truck owners and operators are required by law to carry liability insurance. Because you are also responsible for the well-being of your drivers, customers and the vehicles that you are towing, you’ll need several additional types of coverage on board. Be sure to work with a knowledgeable independent agent specializing in commercial vehicle insurance who can customize a policy to your needs. Your policy may include some or all of the following:
- Tow truck liability insurance: This includes liability coverage for bodily injury and property damage you or your drivers may cause. Minimum liability coverage amounts are mandated by your state’s laws. Tow truck drivers may be held liable under several circumstances:
- If they are at fault in an accident
- If they damage a car they are towing
- If they cause injury to a passenger in their vehicle
- If they damage to another vehicle on the roadway.
This coverage will also provide compensation for legal fees and court costs if you are sued for a covered liability claim.
- Medical payments insurance: This insurance option provides coverage for medical payments incurred if you, your driver or any passengers are injured due to an accident while in your tow truck. This is particularly important as tow truck drivers often provide rides for the owners of the vehicles they are towing.
- Physical damage insurance: This is coverage helps when your truck is damaged, regardless of fault. This type of insurance is usually required by lenders if you have financed the purchase of your truck.
- Comprehensive coverage: Comprehensive coverage provides “other than collision” coverage, and includes damage caused by objects, natural disasters, fire, theft and vandalism.
- Uninsured or underinsured motorist insurance: This coverage provides compensation if you are involved in a collision where the other driver is at fault and that driver does not carry enough insurance to cover your property damage or medical expenses. This type of insurance will also cover a collision with a hit-and-run driver.
- Garage service insurance: Optional garage liability insurance is designed specifically for businesses that offer towing services or service stations. It provides coverage for any damages that may be sustained by a vehicle in service while it is parked or being stored in a covered location. These damages can include those caused by fire, theft, vandalism or even collisions.
- On-hook towing insurance: This coverage is designed specifically for tow truck operators. It will pay for repair or replacement costs if any vehicle you do not own is damaged while you are towing it. This includes damages sustained from collision, fire, theft, explosion, or vandalism.
In each of these cases the amount of compensation you will receive when you file a claim will depend on the amount of coverage you buy. It is important to evaluate your liability risks and the amount of coverage you need to protect your towing vehicles and your assets.
Unfortunately, in our litigious society, liability claims can quickly turn into lawsuits, especially if someone is badly injured. If you feel that the available liability limits are not enough to protect from potentially devastating legal costs, you may want to consider purchasing an umbrella liability policy to increase your liability coverage to $1 million or more.
Is Tow Truck Insurance Expensive?
Because of the increased risks faced by tow truck drivers, towing insurance policies tend to be more expensive than typical commercial truck policies for vehicles in the same weight class. Factors that can influence cost include the age and model of the trucks, the driving records of those that will be operating them, how and where the trucks are used and the coverage options chosen.
Generally speaking, a very basic policy that meets minimum state liability requirements may run just under $1,000 a year. On the other hand, a policy that includes more complete coverage options may run over $5,000 a year.
Compare Quotes and Save
The best way to get low-cost tow truck insurance can be time consuming - you need to comparison shop. Here are a few steps to make this easier and faster:
- Target highly rated insurers. There are websites that can help you measure the quality of an insurer, such as AM Best and other insurance rating organizations.
- Speak to colleagues about coverage options. Sometimes you can learn from other people's mistakes before you buy coverage that won't work for your business.
- Speak to lawyers and financial experts. When you understand what liabilities and assets you need to cover, you'll have better luck understanding how much coverage you need, and for what perils.
- Find the right agent. The right agent can make this process fast, easy, and even pleasant. The key is to target agents who are independent and not tied to any single insurance company - that way you can very quickly collect quotes before you buy.
When you comparison shop for insurance, you'll come out ahead. This is a huge advantage to your bottom line and for your safety.