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Tow Truck

Commercial Tow Truck Insurance

You probably enjoy the benefits of being your own boss and creating your own rules if you operate a tow truck business. However, it’s possible that your business’s future prosperity could be jeopardized if you don’t have sufficient insurance.

Tow trucks used in commercial operations must be insured. Vehicle salvage and auction haulers, full-service stations, and repossession organizations may require commercial insurance for their tow trucks.

Regardless of who is driving, the business owner must purchase tow truck insurance. A good coverage choice would be one that protects all those involved in the business, including the truck, the driver, the business, and any property and individuals who are involved with tow truck activity.

It is crucial that you understand the risks associated with your business and offset them with the correct towing insurance. Doing so will help you keep your business running smoothly and deal with any claims that may be filed against you.

How Much Does It Cost?

Small towing businesses typically pay between $95 and $160 per month for a $1,000,000/$2,000,000 General Liability Insurance policy. Whether or not you offer other services such as mechanical or operate a service station are all factors in determining the exact premium you pay.

When you drive a tow truck, you confront many of the same issues that commercial vehicle owners encounter as drivers, but there are risks specific to your job that cause higher premiums. This is something you will just have to accept and factor into your yearly budget.

Job Specific Risks

Here are some examples to help you understand the additional risks associated with running a towing business:

  • An operator may hurt himself by being exposed to broken glass and rough edges on windshields while he is connecting to a car with extensive damage.
  • Tow truck drivers are frequently called out on days when the weather is terrible which increases the risk of accidents, especially on slippery or snowy roads.
  • A tow truck driver who additionally offers repossession services faces a higher risk of confrontation from upset vehicle owners.

Insurance companies that offer tow truck coverage recognize the kinds of policies that may be pertinent to you. You can tailor your coverage with the help of an agent to cover you at all levels.

What Does It Cover?

The law requires commercial tow truck operators and owners to carry liability insurance. The full range of coverages is necessary to minimize the possibility of claims. You should think about how much risk you are willing to take on, and whether you have the resources to cover any loss before choosing an insurance policy.

Coverage Types

Liability – This includes harm or injury to other people that you or your driver is responsible for. You must buy a minimum $15,000/$30,000. You can also be eligible for payments towards your legal bills if you find yourself entangled in a lawsuit.

Medical Payments – This sort of insurance pays for medical expenditures that come from injuries you, your driver, or the truck’s passengers suffer while working. This coverage type is vital for tow truck drivers who often provide rides to people whose automobiles are disabled.

Physical Damage – Physical damage policies cover damage to your truck, regardless of who caused it. If you have leased or financed your vehicle, your lender may request that you keep this insurance on it.

Comprehensive Policies – A comprehensive insurance policy covers damage from non-collisions. If your truck gets vandalized, is set on fire, or you are affected by a natural disaster, for example, you may qualify for compensation.


Uninsured/Underinsured Motorist Protection – Use this form of coverage to protect yourself from people who have inadequate or no insurance while you are on the road.

Garage Service Protection – This coverage will help to protect you in the event of collision, vandalism, theft, or fire while parked in a covered location.

On-Hook Coverage – This covers claims if a vehicle is damaged when you tow it.

An occurrence is not always covered by each insurance policy. For example, Garage service coverage applies only while a car is stored or placed in a facility or enclosure. So, to avoid having loss, it is important to get multiple policies to cover all scenarios.

What Is Not Covered?

Even with the fullest coverage, certain situations, scenarios, or cargo kinds are not covered by tow truck insurance. These include:

Intentional Damage – Insurance fraud involves intentionally inflicting harm to collect compensation. Tow truck insurance does not cover intentional harm to another person or property.

Damages Surpassing Policy Limits – The amount of damage that exceeds the insurance coverage limit is not covered. Additional coverage, whether in the form of a liability insurance policy or an umbrella policy, can raise coverage limits.

Certain Kinds of Freight – Some insurance policies, even with on-hook towing, will not cover certain types of items or products such as money, drugs, and explosives. In case a business operates a tow truck that transports hazardous items, the company can purchase hazardous material tow truck insurance.

3 Top Carriers of 2021

Did you know most large insurance carriers do not provide wrongful repossession coverage, even those that provide coverage for towing businesses and other enterprises? This makes it difficult for towing companies who also provide repossession services to get all the insurance coverage they require operating their businesses.

The following is a list of 3 top tow truck insurance providers that also offer coverage for wrongful repossession:

  1. Progressive Tow Truck Insurance – In 2019, the average monthly tow truck insurance premium was $450 for Progressive. (This includes primary liability and physical damage coverage, with clean driving records). Progressive’s financial strength has been praised by all three credit agencies. AM Progressive’s financial health is rated A+ (Superior) by Best, Aa by Moody’s, and AA by S&P.
  • Liberty Mutual Tow Truck Insurance – We could not locate any information on the rates for Liberty Mutual insurance. Instead, towing truck operators should call directly or use the corporate website to reach a Liberty Mutual agent. Liberty Mutual holds an A+ rating with the Better Business Bureau (BBB) and a second-best rating, A2, from Moody’s. Besides the package or multi-policy discounts, Liberty Mutual also offers a paid-in-full discount.
  • Prime Insurance Company – Towing and repossession companies will require an estimate from Prime to know their costs. Prime asserts that they have no minimum premium requirements and do not assign risk without all the essential information. Prime excels at repossession towing and has an A+ rating with the BBB.

These are merely a few out of many options. As always, do your own research before purchasing a policy. Informed consumers get the best coverage.

The Bottom Line

Having adequate commercial insurance for your tow truck can mean the difference between going out of business after a loss and recovering with the least amount of interruption and financial impairment. State regulations vary, with differing filing procedures and minimum levels of necessary insurance coverage. Therefore, it is vital to do your research and connect with carriers you can trust.

Be sure to compare quotes from several insurers to determine which carrier offers the most suitable plan for your towing business needs. Most carriers offer tow truck insurance quotes online, with the option to speak with an agent. Phone calls with insurance agents can provide you with the most information. Collaborate with your insurance agent to establish which coverage kinds are critical for you, as well as how much insurance you require to effectively reduce your risk exposures.