The market for Tow Truck Insurance Programs is large and growing. The annual revenue for the motor vehicle towing market in the US is $8.4 billion, with an average yearly growth of 4.7%. There are 9,100 towing firms and 31,000 licensed tow truck operators. In addition, tow truck businesses often provide incidental services, such as mechanical repairs, vehicle storage, and emergency road repair services.
What is Tow Truck Insurance & Who Needs It?
Tow truck insurance programs protect tow truck drivers and businesses that provide automotive, roadside repair, and disabled vehicle assistance services. Beyond regular tow trucks, other types of specialty tow trucks are in use by individuals or businesses for these and other business models:
Types of Tow Truck Insurance
All tow truck entities are required at a minimum to carry liability insurance known as tow truck liability. Virtually all tow truck companies need and carry additional standard business coverages and industry-specific insurance. This guide to tow truck insurance includes the following list with descriptions and details on the most common coverages towing operations require.
Commercial Auto Liability Insurance
A Commercial Auto Liability insurance policy helps pay for financial losses due to accidents that occur while the owner or employee operates a company-owned vehicle, a hired or personally-used auto, or any other type of auto used in business operations. It's important to note that a personal auto insurance policy excludes coverage for vehicles in use by a business.
While a business auto insurance policy protects vehicles used for business-related trips, a commercial auto liability policy covers dedicated vehicles built to do specific jobs. Commercial auto liability insurance applies to vehicles owned by or operated in a business. For example, it protects a business from liability for damages caused by accidents involving its cars. For instance, it compensates people injured in vehicle accidents. It also pays to replace or repair damage to property and other vehicles when the business's vehicle is involved and the driver is found at fault. A standard policy comes with a $1 million limit.
Physical Damage Coverage
Physical Damage Insurance is an insurance term to describe the policies that group together to compensate vehicle owners for losses from damage to their commercial vehicles. It is a collection of policies that protect against such perils as collisions, vandalism, fire, and theft. For example, collision insurance covers damage to business vehicles involved with other vehicles or objects. And a comprehensive policy provides coverage for losses due to fire, theft, vandalism, and other sources. CAC insurance covers damage to your automobile from fire, theft, and vandalism. Another option is Fire and Theft with Combined Additional Coverage (CAC) is, a limited form of Comprehensive coverage specific to specific heavy trucks. It is also known as Specified Perils or Limited Comprehensive insurance.
Garagekeepers liability insurance protects trucks and autos kept or stored in the tow truck business's care, custody, or control. There are three types of Garagekeepers insurance.
Direct Primary Garagekeepers is one type of liability coverage that compensates for losses without respect to whether the business is legally obligated to pay or not, such as losses from weather events, theft, and vandalism.
Legal Liability will only pay for damage to a customer's vehicle due to the insured's negligence, thus making it legally responsible.
Direct Excess is also a coverage that protects against losses without liability assessment. For example, it will pay for excess loss beyond the limits of the customer's policy.
On-hook insurance safeguards the client's car when hooked up to a tow truck, rollback, or wrecker company tow vehicle. However, cars in tow are not covered by any other business policy. Any damage to the towed vehicle, whether from an accident or disaster, needs the liability protection of an on-hook insurance policy because the high price of cars that can end up on a wrecker's hook poses a substantial financial risk to the business.
Wrongful repossession liability is insurance to protect tow truck operators for liability claims of damages they cause due to their errors, omissions, negligence, or failure to render professional services. Usually, it insures against claims of possessing the wrong vehicle or not getting the paperwork and legal order from a lender before putting the repo vehicle on the hook.
Typical Tow Truck Insurance Program Coverage & Limits
Below are the types of tow truck insurance with usual policy limits usually bundled into Tow Truck Insurance Programs because they are considered necessary by the Tow Truck risk management services that demand them.
Besides the specialty coverages outlined here, towing operators will also need a range of traditional property and casualty business coverages including Workers’ Comp, EPLI, Crime, and more.
Tow Truck Insurance Costs (and what factors affect the price)
The variety, location, and size of tow truck businesses are significant enough to make providing average cost estimates complicated. Other factors, including the business owner's experience, the business's claims history, and more, are points of underwriting considerations. In general, most single truck towing operations can expect an annual premium of $5,000 - $7,000 for commercial auto and property damage coverage. Physical damage starts around $1,000 and up to $3,000, while on-hook coverage has an average annual premium range of $4,000 - $10,000. Finally, wrongful possession insurance varies depending on how much of the business's revenue repossessions represent. Annual premiums can run $10,000 for operations whose yearly revenue is 25 percent or more from the repo business.
Best Tow Truck Insurance Programs
At ProgramBusiness.com, we know the time and trouble it takes to resource market for the best tow truck insurance programs. So, it's a common need and stress point for agents to access and compare top programs easily and equally challenging for carriers, MGAs, wholesalers, and program administrators to connect them.
We created ProgramBusiness.com to serve both sides of the insurance distribution system for specialty programs. Agents seek to find the top programs for tow truck insurance; they can find what they need quickly and efficiently. Amwins Underwriting is a wholesale brokerage operation with globalized underwriting solutions for many specialty coverages, including Tow Truck Insurance Programs. We invite you to check them out.