Last Updated: September 12, 2022

Can Tow Truck Insurance Help Your Business Do Better?

TLTR: Tow trucks are there for all vehicles in need. But who do tow-truck drivers call when they’re in trouble? This article discusses tow truck insurance, what it covers, and why it’s not optional for your tow truck business. 

Waiting until disaster strikes to get insurance for your vehicle isn’t only ill-advised, it’s also illegal. That holds true for anything you can drive on public roads, including tow trucks. Tow truck start-ups can cost anywhere from $1,500,000 to $2,000,000. Are you sure you want your business on the road without the proper safety nets?   

The Centers for Disease Control and Prevention released a report that revealed the rate of non-fatal injuries in full-time tow truck drivers was 204 per 10,000 drivers. The report also stated that the rate of fatal injuries in full-time drivers was 43 per 100,000 drivers.  

Tow truck insurance protects tow truck businesses from losses pertaining to liabilities, physical damage, uninsured motorists, and some specific troubles only tow trucks could get into. Businesses that should purchase this coverage are:  

  • Towing service providers  
  • Roadside service providers  
  • Auto repair shops  
  • Vehicle-part salvage businesses  
  • Auto Workshops

In this blog

What Does Tow Truck Insurance Cover? 

Much like commercial truck insurance, it protects the truck from liabilities that commercial auto insurance cannot start to cover. Let’s look at the details:

Liability Insurance 

General liability insurance is mandatory in all U.S. states that require auto insurance. In fact, it’s required for all businesses to operate. The coverage pays for any liabilities and damages that you are held liable for. Here are two types of liabilities this policy will cover:  

  • Bodily Injury Liability Insurance: If you or your trucks cause damage to third parties, then you are legally obligated to pay for medical expenses and other related costs like rehabilitation, therapy, loss of income, as well as pain and suffering. General liability insurance under tow truck insurance will certainly pay for the bodily injury medical costs on your behalf.  
  • Property Damage Liability Insurance: Imagine you collide with another vehicle that is totaled as a result. You’d be on the hook for paying for its repair, or worse, the replacement of the vehicle. With general liability insurance, these expenses are covered without you needing to empty your life savings.

Medical Expenses Insurance 

When an accident occurs, you and your passengers may need medical attention.  You will be responsible for paying medical bills for injuries that your passengers suffer while in your vehicle. With small incidents like fender benders, you could probably cover any minor medical bills out of your own pocket. But what about spinal injuries, internal injuries, as well as broken bones?   

Medical expenses insurance exists to help you pay for these expenses for you and your passenger(s).  

Collision and Comprehensive Insurance 

Collision insurance pays for the repairs as well as replacements of your tow truck in case of a collision with another vehicle or an object. Comprehensive insurance provides compensation in case of fire, theft, vandalism, windstorm, thunderstorm, as well as other similar perils.   

In a nutshell, comprehensive insurance protects you from every peril except for collisions. It’s important to get both coverage options so you don’t expose your truck to unnecessary expenses. 


Uninsured/Underinsured Motorist Insurance 

Uninsured/Underinsured motorist insurance may sound unimportant, but it’s not one to miss, especially if you drive frequently. Auto insurance is mandatory if you’re driving in the streets, but sometimes there’s a gap in coverage. Sometimes, people are underinsured with respect to the damage they’re liable for.   

The coverage has four subcategories:  

Imagine you’re driving down the street as well as a car collides with you. Since the collision was caused by the other driver, they should pay for any damage to your vehicle. But the driver only has minimum insurance, which doesn’t cover all your expenses. If you have uninsured/underinsured motorist insurance, then you can get your truck repaired without having to dig into your savings.  

Additionally, any bodily injury to you and your passengers will be covered through uninsured motorist bodily injury coverage.

Garagekeepers Legal Liability Insurance 

Garagekeepers insurance was developed for tow truck business owners to protect them when they store their customers’ automobiles.   

Let’s say your business just towed in a broken-down car. By the time you bring it to the mechanic for repairs, their garage has already closed. You bring the car back to your garage. At night, some thieves break the car window and steal your customer’s valuables. Garagekeepers insurance will pay for the compensation.  

Note: You must purchase on-hook towing insurance and general liability insurance first to purchase garagekeepers legal liability insurance. In some states, garagekeepers insurance is called storage location insurance, while on-hook towing insurance is called garagekeepers legal liability insurance. 

On-Hook Towing Insurance 

On-hook towing insurance protects your business from having to pay for damage while the customers’ vehicles are being towed away in your care. If the vehicles suffer damage due to fire, theft, vandalism, or other perils while being towed, then you will be held liable. 

Wrongful Repossession Insurance 

Tow trucks are often hired to repossess vehicles. It’s possible your tow truck operator may either tow away the wrong vehicle, or repossesses the car even though their payments are actually up –to date. This sort of error can cause vehicle owners to file a lawsuit against you.   

Wrongful repossession insurance isn’t mandatory, but it’s still very useful for tow trucks. The coverage will certainly take care of lawsuit expenses. Although expensive, wrongful repossession coverage is an important add-on for commercial tow truck insurance. 

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Some Extra Insurance Policies to Consider  

Businesses usually require more insurance than just the minimum requirements. Here are some coverage options you should consider:  

  • Workers Compensation Insurance: If you have multiple employees, getting workers compensation insurance is a must. It protects your employees from being unethically fired or harassed while at work.  
  • Business Interruption Insurance: Business interruption insurance helps your company stay afloat while your business temporarily closes down due to named perils.  
  • Business Owners Policy: Business Owners Policy (BOP) is similar to business interruption insurance, but for small/medium sized companies. It helps businesses stay afloat during natual disasters, equipment breakdown, theft, and other troubles. 
  • Commercial Umbrella Insurance: In case your tow truck insurance limits aren’t cutting it, commercial umbrella insurance can help increase your limits so that financial upheavals don’t stop you from operating. 

Exclusions to Tow Truck Insurance 

Tow truck insurance can cover most perils, but won’t cover intentional damage and certain types of cargo. Here’s a brief discussion on standard exclusions:  

Intentional Damage 

Suppose one of your customers is disgruntled that your tow truck took a while to get to them. They refuse to pay you, and in a fit of anger, you cause damage to their property. Commercial tow truck insurance won’t cover the damage. Additionally, causing harm to your own tow trucks in hopes of collecting your insurance money will get you in serious legal trouble.   

Insurance fraud can get you up to five years in jail and thousands of dollars in fines in some states. For example, according to Shouse California Law Group, in California, you can be sent to state prison for up to five years and pay a $50,000 fine for fraudulent damage to insured property.   

Damages Exceeding Policy Limits 

No matter how good your policy is, it will have coverage limits. For example, your trucks cause physical damage to a car worth $15,000 but your insurance only covers $5,000. To cover such cases, you can opt for a commercial umbrella insurance policy.  

Excluded Cargo 

A standard towing truck insurance policy won’t cover cargoes such as money, drugs, tobacco, jewelry, and explosives. Consider purchasing hazard insurance 

Tow Truck Insurance Companies in 2021 

Here are two top national insurance providers that offer tow truck insurance. Compare prices, service, and coverage options before you decide which to go with.


Progressive is one of the most popular insurance companies of all time. With an A+ rating with the Better Business Bureau, the company is very financially sound. It is currently offering one of the cheapest premiums for tow trucks. Progressive is known for above-average customer service.   

Liberty Mutual Insurance 

Liberty Mutual, with the launch of the Trinity Towing Program, offers many specialized coverage options like wrongful repossession insurance and on-hook insurance. Their customer service is great, and so is their financial rating from AM Best. The minimum costs aren’t specified on their websites, so you’ll have to communicate with them via an insurance broker.  


How Much Does Tow Truck Insurance Cost? 

The cost of your tow truck insurance honestly depends on more factors than just the amount of coverage you opt for. Some of these factors include age, make, and model of the trucks, number of trucks, size of the business, amount of coverage, number of employees, and state requirements.  

According to Smartest Dollar, single tow truck businesses may pay up to $7,000 for liability coverage. Similarly, on-hook towing insurance will cost upwards of $9,600 while garagekeepers legal liability insurance will cost you $1,300. Wrongful repossession insurance will cost a total of $10,000.   

Progressive claims that the national monthly average for tow truck insurance premiums was $448 for tow truck businesses with single trucks.   

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Before You Go 

Commercial auto insurance is many things, but it isn’t enough to cover tow trucks. Insurance companies specially designed tow truck insurance to help small and medium tow truck businesses stay protected, come what may. 

If you’re not sure what types of coverage you need and how much to pay for it, then you must consult an insurance expert.   

A local insurance agent can assess your risks and advise you on what you need. Additionally, they will get you exclusive discounts and offers. Take a look at our insurance directory and find an agent of your choice.  

Tow Truck Insurance FAQs

Why is tow truck insurance so expensive?

Tow truck insurance price is based on the worth of your trucks. Many factors are responsible for the cost, such as age of the truck, driver history, years of business operation, make and model of the truck, number of trucks, and coverage options. If you’re not sure how to choose a policy, then consult an agent. An agent can get you discounts for inquiring online, driving responsibly, or for carrying insurance without gaps.  

How can I lower my tow truck insurance premium?

Tow truck insurance isn’t cheap. However, you shouldn’t be cutting corners just to save some bucks. Here are some ways you can lower your cost of tow truck insurance without compromising on the coverage:  

  • Keep a clean driving record.  
  • Ask your insurance agent for discounts.  
  • Keep your tow trucks in shape. Always go for regular servicing.  
  • Review your coverage periodically.  
  • Compare insurance quotes before buying a policy.  
  • Opt to pay higher deductibles.  

Note: Don’t skimp on coverage in any case. Your towing truck company thrives because your tow trucks do. If some mishaps occur and you have to pay for repairs from your own pocket, then it will cause a huge dent in your business savings.   

Why should I talk to insurance agents before purchasing tow truck insurance?

Tow truck insurance policy is a highly specialized insurance policy. Some insurance companies don’t carry it, and the rest may not carry all the coverage options that your business needs. You could be putting the time and effort into comparing quotes all by yourself. But wouldn’t you rather have an insurance expert do all the legwork for you while you run your business worry-free?   

Insurance agents can also bring you discounts and offers that you may otherwise have missed. If you’re looking to purchase insurance the smart way, then consulting an expert is the first step.   

Can my commercial vehicle insurance cover my tow truck?

Commercial vehicle insurance is designed to cover general insurance for other commercial auto businesses. Tow trucks require a little more coverage than a run-of-the-mill auto service company. With a tow truck insurance policy, your business is covered in case of a wrongful repossession, and damage to your client’s vehicles while being towed or while being stored on your premises.   

We recommend total peace of mind while owning and operating a business. That’s why we recommend purchasing specialized tow truck insurance. If you’re not sure what policies you need, talk to our insurance agents today.  

Can I bundle my tow truck insurance with other policies?

Absolutely! Bundling insurance policies from the same provider can get you exclusive discounts. Along with tow truck insurance, you’re probably going to need business interruption insurance, commercial general liability insurance, commercial property insurance, and workers compensation insurance (if you have multiple employees). 

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Multiple Coverage Options at Your Fingertips

Choose from various options and select the policy that best suits your requirements.