Getting commercial tow truck insurance is mandatory in most states if your business operates tow trucks. It’s also a requirement in most lease and contract agreements to ensure you can handle the additional, unique risks of running various tow truck business operations.

Below, we discuss what commercial tow truck insurance is, and what types of coverage your insurance policy should include if you want to run a towing business in several states.

We also highlight a few optional coverage options that different towing companies ought to consider helping you fully secure your specific towing business from various financial losses.

What Is Tow Truck Insurance?

Tow truck insurance is a commercial auto insurance coverage for towing companies. It considers how complex and expensive accidents involving tow trucks are and offers adequate protection from the financial implications of these incidents.

If a tow truck accident occurs and you are the at-fault party, you’ll be responsible for damages to your car, the towed vehicle, and other vehicles involved. This is besides covering the medical bills for all injured victims. In this scenario, the right tow truck insurance solutions will help you to:

  • Cover the repair and replacement cost of your truck, customer vehicles, and third-party vehicles involved in the accident (up to your policy limit)
  • Compensate injured victims for all the physical, emotional, and psychological losses incurred because of the incident (up to your policy limit)
  • Cover all legal fees throughout any lawsuits you may face after the accident (separate from your policy amount)

What Does Tow Truck Insurance Not Cover?

It’s critical to note that tow truck insurance does not cover the following:

  • Intentional damage – this includes any injuries or damage you inflict on other people or their property knowingly
  • Certain types of cargo, including explosives, pharmaceutical drugs, and alcohol
  • Damages beyond your policy limits – your towing truck insurance company will only cover damages and expenses to a maximum of your policy limit per incident.

Tow Truck Insurance Requirements

Following the U.S. federal law, all tow truck operators must purchase auto liability insurance to conduct their business. This is the minimum tow truck insurance requirement in all states. Other requirements vary from state to state.

Some regions require you to get the following:

  • Medical payments coverage
  • General liability coverage
  • Physical damage insurance and
  • Worker’s compensation insurance if you have several employees.

Also, you must meet all the federal and state insurance filing requirements to comply with all insurance laws. Learn more about this on FMCSA’s detailed summary of insurance filing requirements.

Types of Commercial Tow Truck Insurance

There are several types of commercial towing truck insurance coverage. Here are a few essential coverage options you should include in your tow truck insurance policy to run your towing venture smoothly:

Liability Coverage

Liability coverage includes bodily injury and property damage liability.

Bodily injury liability insurance compensates third-party victims for injuries caused by a tow truck accident involving you or your employees. Property damage liability coverage pays for damage to their property.

Liability insurance is the fundamental coverage required for all tow truck operators nationwide. States often establish minimum coverage amounts for operating in their region; for instance, Texas mandates approximately $500,000 in liability coverage per tow truck per accident.

Physical Damage Coverage

Physical damage coverage also comes in two forms – collision and comprehensive coverage.

Collision coverage pays for the repair or replacement costs of your company’s tow truck if it hits another car or object, such as a pole. It also covers you if your tow truck rolls or overturns.

In contrast, comprehensive coverage protects you from several non-collision incidents, like vandalism, theft, fire, harsh weather, etc.

Medical Payments Coverage

Medical payments insurance pays the medical bills of your covered vehicle’s occupants if they sustain injuries in an incident involving your tow truck. Occupants here could be you or your tow truck drivers and other passengers.

Uninsured/ Under-insured Motorists Coverage

This coverage option covers medical expenses if you or your tow truck drivers get injured in an accident caused by a driver with insufficient liability insurance or one without insurance.

Workers’ Compensation Coverage

Workers’ compensation insurance is critical for tow truck companies with several employees. It compensates employees for any work-related injuries. It also covers legal fees for all employee injury-related lawsuits.

Additional Coverage for Towing and Storage Businesses

The coverage options above may not be adequate for various tow truck business operations. Here are some optional but vital additional coverage for different towing and storage businesses you should consider for maximum financial stability in your specific towing business:

On-Hook Towing Insurance

On-hook towing insurance protects you when towing customers’ vehicles. It covers the repair or replacement cost for a client’s vehicle if it gets damaged in a crash, theft, vandalism, or fire while you’re hauling it. This coverage is helpful if you’re a roadside assistance provider who often tows third-party vehicles.

You may also want to purchase cargo coverage to cover the items inside the vehicles you tow.

Garage Keeper’s Legal Liability Insurance

Garage keepers legal liability insurance is vital for towing service companies that store clients’ vehicles for repair, parking, or other services. It safeguards clients’ vehicles while in your care at a covered location, covering physical damage caused by theft, vandalism, collision, and more.

Consider commercial property insurance to protect your business premises, equipment, and tools.

storage garage

Tow General Liability Insurance

General liability insurance protects you if you’re legally responsible for property damage and personal injury to a customer or third party. The damage or injury may be related to your business, but not your covered vehicles.

Final Thoughts

Insurance requirements differ for tow truck companies based on their specific services. For instance, a roadside assistance provider may need different insurance policies compared to a towing company specializing in repossession or operating a repair facility. This is because each company encounters distinct risks alongside the common risks shared by all trucking companies.

To choose the right coverage, evaluate your business goals and budget, then shop around to identify the best tow truck insurance provider to match your business needs. Ensure you get multiple quotes from various providers and compare them before settling for one.

Here’s an in-depth guide to the best commercial truck insurance brokers. Check it out to understand how to choose an insurance provider. You can also reach out to us for assistance, especially with add-on coverage.


Contact Us
close slider