What Is Towing Insurance and What Does It Cover?
Protect your towing business. Learn what towing insurance covers, who needs it, and how to secure essential coverage for your operations.
Towing insurance is a specialized type of commercial insurance crafted to protect businesses engaged in towing and roadside assistance operations. It addresses the distinct risks involved in operating tow trucks and handling other vehicles. This coverage helps safeguard a business from potential financial losses stemming from accidents, property damage, or liability claims.
Types of Coverage
Commercial Auto Liability is a foundational component, covering bodily injury and property damage to others if the tow truck is at fault in an accident. This protection extends to legal defense costs and settlement amounts.
Physical Damage coverage protects the tow truck itself from various incidents. This includes Collision coverage for damage resulting from an accident and Comprehensive coverage for non-collision events such as theft, fire, vandalism, or natural disasters.
On-Hook coverage protects the vehicle being towed while it is hooked to the tow truck and in transit. This includes incidents like collision, vandalism, or fire affecting the towed vehicle.
Garagekeepers Legal Liability is another important coverage, addressing damage to vehicles that are being stored or repaired at the business’s premises after being towed. This safeguards customer vehicles against risks like theft, fire, or vandalism while they are in the business’s care.
Workers’ Compensation insurance is also relevant for towing businesses with employees, providing coverage for medical expenses and lost wages for employees injured on the job.
Who Needs Towing Insurance
Towing insurance is important for businesses that routinely transport other vehicles. Dedicated towing companies, whose primary service involves vehicle recovery and transport, require this specialized protection due to constant exposure to road hazards and potential liabilities. Roadside assistance providers also need this coverage, as their operations involve responding to disabled vehicles and often require towing.
Auto repair shops that include towing services, and vehicle transport companies, need this insurance to cover risks. Businesses involved in recovery and repossession also fall into this category. These businesses face unique challenges such as securing vehicles, navigating traffic with a towed load, and potential for damage during transit.
Factors Affecting Cost
Several variables influence the premium for a towing insurance policy. The type and age of tow trucks are significant factors, with heavier, newer, or specialized recovery vehicles often incurring higher costs due to increased repair expenses and potential liability.
Operator driving records also play a major role; clean histories lead to more favorable rates, while violations or past accidents increase premiums. Geographic location impacts costs, with urban areas having higher rates due to increased traffic density, accident frequency, and theft.
Coverage limits and deductibles also affect the premium; higher limits increase cost, while higher deductibles can lead to lower premiums. A business’s claims history and years in business further influence rates. The specific types of towing or recovery services provided, such as accident recovery or repossession, can also influence cost due to varying risk levels.
Obtaining Towing Insurance
Acquiring towing insurance begins with assessing the business’s operational risks and coverage requirements. This involves evaluating the types of towing services offered, the fleet’s vehicles, and the scope of roadside assistance. Gathering detailed information about the business, its vehicles, and operator driving records is a preparatory step before applying for coverage.
Seeking quotes from multiple insurance providers or an independent agent specializing in commercial vehicle insurance can provide options. When comparing policies, consider coverage limits, deductibles, and any exclusions beyond just the premium. Before finalizing a policy, review all documents to understand the terms. Maintaining ongoing coverage and regularly reviewing the policy helps ensure adequate protection as business operations or fleet size change.