A towing company operates in a high-risk industry. Towing insurance, however, is designed to safeguard a towing business from potential hazards such as bodily injury or property damage. Typical examples of businesses that require towing insurance include:
- Roadside assistance providers.
- Auto club contractors.
- Full-service stations.
- Mechanical repair shops.
- Auto salvage haulers.
- Auction companies.
- Rotational towing businesses.
Many of these types of auto industry-specific businesses, not necessarily a tow company, will have a tow truck at the ready, just in case it’s needed to provide some in-the-moment towing service.
Suffice to say, if your business is one of the above and operates a tow vehicle, it’s probably a good idea to get yourself some tow truck insurance coverage. Many moving parts go into the towing industry and every business that operates within it. Aside from the wreckers themselves, a tow truck business also needs to think about the tow truck driver and the vehicles that your tow trucks transport.
What’s more, your tow truck company may be keeping your clients’ cars on your premises, which can expose you to additional risks, such as property damage or even theft. Fortunately, however, this is where a professional insurance company like Mike Keith Insurance can help. Together, we will determine your exact needs and formulate optimal and comprehensive tow truck insurance coverage.
What Are the Basics Of Towing Insurance?
As mentioned above, tow truck insurance is essential for any business that performs a towing service or has a tow truck that it uses regularly. This is regardless of whether the truck or flatbed is leased or owned. With comprehensive tow truck coverage, businesses can be sure that they remain protected if damage occurs to their wreckers, power units, and other vehicles, in the event of a misfortunate accident.
Tow truck insurance is a specialized form of commercial truck insurance, which is a subsection of the broader commercial auto insurance. It’s specifically tailored to meet the unique needs and requirements of towing and recovery service providers. A tow truck operator will usually have to respond to all types of calls, ranging from illegally parked cars to recovering broken down vehicles on the side of the road. And while performing these services, various incidents can occur that may result in damage, loss, or injury of a person or property.
Business Owners Policy (BOP)
Since it is a business, a tow truck operator will share some insurance protection with other businesses. Some of the basic coverage can be bundled into what is called a Package policy and these can include:
- Property Insurance – This type of insurance covers buildings, office equipment, furniture, inventory, trucks, equipment, etc.
- Business Interruption Insurance – If the tow truck business is affected in a way that it requires to cease operation for a period of time, this insurance helps cover the operating expenses from a different location, and any potential lost income.
- Liability Insurance – The BOP provides the towing business with general liability insurance. Tow truck operators, in particular, will typically want to invest in this liability protection, and other liability insurance types.
This BOP package, however, is not part of a tow truck insurance package.
What Type of Insurance do You Need as a Towing and Recovery Company?
Commercial tow truck owners and operators are also required by law to carry liability insurance. But since a towing service provider is also responsible for the well-being of their drivers, customers, and their vehicles, they also need some additional types of coverage. Below are some of the must-have tow truck insurance policies that businesses in the towing industry need to consider.
Auto Liability
This is the part of the policy that responds to an accident with a 3rd party where you are at fault and where there is bodily injury and/or property damages. Additionally, this policy covers any attorney fees if or when the 3rd party decides to sue. The typical coverage limits start at $1M.
Auto Physical Damage
As its name would suggest, this is a comprehensive collision coverage for trailers and power units that are listed in your policy. This coverage helps you out regardless of fault and is usually required by lenders if you’ve financed the purchase of your truck.
General Liability
This is a type of insurance policy that provides coverage to businesses for personal injury, bodily injury, and property damage caused by the towing and recovery company’s products and operations on the business’s premises.
Garage Liability Insurance
Regardless of the level of planning, accidents can happen everywhere, including on-site, off-site, with employees, or with customers and/or their property. General liability covers any injuries suffered at your garage and damages caused by you to 3rd parties and their property.
However, most garage liability will also include coverage for liability that arises from the business’s general business operations, such as employment discrimination lawsuits. This policy affords coverage when a fault is assessed for bodily injury and property damages. For example, when a tire comes off after it was changed, a fire resulting from a jumpstart, any property damages after an unlock, and more.
Garage Keepers Insurance
Towing business and service stations might consider getting this type of insurance to protect their customers’ vehicles while they’re being held or operated on. It provides comprehensive and collision coverage for customer autos while in your tow and recovery company’s control. This policy is also subject to deductibles.
On-Hook Insurance
The on-hook insurance policy helps cover any damages to autos that are in the process of being towed. Some policies will limit on-hook coverage to vehicles, while others limit the coverage to motorized pieces of equipment. This policy typically covers damage caused by fire, vandalism, theft, and accidents.
Cargo Insurance
Business owners can also opt to purchase the cargo insurance policy since it pays for coverage to lost, stolen, or damaged property in the custody and control of your tow truck driver. Cargo coverage can also extend to other pieces of equipment being towed, such as tractors, forklifts, or skid steers. This is a coverage that most tow truck businesses should take into consideration but should also keep in mind that the policy’s terms and conditions may vary, depending on the insurance provider.
Hired and Non-Owned Auto Insurance
Also known as HNOA insurance, this policy covers liability expenses for any accidents that involve a power unit, auto, or trailer that your business has rented but doesn’t own. It can also include employees’ own personal vehicles that are used for work conducting work errands. However, it should be mentioned that the Hired and Non-Owned Auto insurance doesn’t cover any accidents that occur during commutes or personal errands taking place during business hours. It also doesn’t cover any physical damages to non-owned vehicles.
Workers’ Compensation Insurance
The Workers’ Compensation insurance is mandatory if you have employees. It helps cover any medical costs and a portion of lost wages for any employee who becomes ill or injured while performing their duties.
Umbrella Coverage
In today’s highly litigious society, any liability claims can turn into lawsuits at a moment’s notice. This is particularly true if someone becomes severely injured or has suffered a significant property loss. An Umbrella coverage will help protect you from any potentially devastating legal costs, especially if you feel that the available limits you have are not enough. You may consider purchasing an umbrella liability policy that increases your liability coverage to over $1M.
Getting the Best Deal on Your Coverages
Not all tow truck organizations are the same, meaning that there is no one-size-fits-all insurance policy. What may be absolutely necessary for some can be only an option for others. Fortunately, tow truck insurance coverages allow you to customize your policy to fit your business needs.
At Mike Keith Insurance, we can help you find that perfect combination of coverage and rates to protect your towing operation from costly claims. With over 50 years of experience, we are the Agency of Choice for many Tow and Recovery businesses. Our unparalleled service and “A” rated carrier base allow us to provide you with the most reasonable price and best coverage you need. Contact us today, we will review your current program and work together to design a solution that will best suit your needs!
