What Trucking Businesses Need to Understand About Insurance for Tow Trucks

Strong Tie Insurance October 4, 2021 Our Blog

Many types of automotive insurance are available depending on your needs. As a trucking business, you should know the different types of cheap commercial truck insurance coverage, so you can properly protect your business from any unforeseen financial burden.

Unlike other businesses, tow trucking companies do not transport people or goods, they transport vehicles that may carry riders or goods inadvertently. This means that tow trucks are exposed to a unique set of risks, which need specific insurance coverages.

What is Tow Truck Insurance?

Insurance for tow trucks is a specific type of trucking insurance that pays for injuries and damages to property but also covers the towed vehicle, other passengers, and contents of the towed vehicle.

Below are some examples of coverages that tow trucking businesses need.

Commercial Auto Insurance

This is the most common type of insurance required across the board from trucking companies and any businesses that use vehicles to operate. Commercial Auto Insurance is a type of primary liability insurance that covers injuries and damages to other people or property.

When an accident happens, and you are at fault, this coverage will pay for the medical fees or reparation costs incurred by other people due to your negligence.

Though similar to personal liability insurance and personal auto insurance, commercial auto insurance covers more vehicle types such as box trucks, food trucks, work vans, and service utility trucks.

Commercial Auto Insurance Coverage

Moreover, commercial auto insurance has different coverage and is rated differently from other auto insurance.

Commercial auto insurance is single limit policies that offer the same amount of coverage per accident regardless of whether the incident involves bodily injury or property damages, and whether it applies to only one person or more.

Besides coverage for bodily injuries and property damages, commercial auto insurance also has uninsured motorist coverage so that your injuries or even that of an uninsured motorist are covered.

But most importantly, what sets commercial auto insurance apart from personal auto insurance is the comprehensive physical damage coverage which pays for any damages to your vehicle caused by theft, vandalism, flood, fire, and other covered circumstances outside your control.

The collision coverage covers vehicular damages caused by your vehicle hitting or being hit by another object, vehicle, property, or otherwise.

On-Hook Insurance

On-hook insurance is a type of liability insurance. But rather than focusing on the primary vehicle, it is focused on the truck being towed.

The on-hook insurance coverage pays for damages to towed vehicles or any vehicle that is hooked onto your tow truck. It covers any damages a vehicle encounters while you are moving them.

Your on-hook insurance will shoulder the reparation or replacement costs. 

Cargo Coverage

Not to be confused with on-hook insurance, which only protects the vehicle itself, cargo coverage covers anything the towed vehicle may carry.

This can be personal items such as purses, gadgets, and other personal items that are vicariously transported when a vehicle is being towed.

How Trucking Businesses Benefit from Tow Truck Insurance

Trucking businesses need to protect not only their truck and their driver, but also the cargo they transport.

Given that the nature of tow trucks is to transport vehicles, then trucking businesses ought to protect the vehicles hooked onto their trucks and the contents, alongside their tow truck and truck driver.

Commercial Auto Insurance 

Commercial auto insurance ensures that your truck and your driver are protected should an accident happen to your tow truck, whether it’s transporting a vehicle or otherwise at the time of the incident.

This is important to safeguard your trucks and personnel, protect your business assets, and make your workers feel safe while serving your customers.

On-Hook Insurance

Meanwhile, an on-hook insurance coverage prevents your business from incurring unforeseen fees due to possible vehicular damages suffered by the cars you are towing.

This gives your clients peace of mind, knowing that should accidents happen, the damages will be paid for. It also makes you a more appealing option when they need towing services.

Cargo Insurance

Lastly, cargo insurance, though not required, is highly recommended for tow trucking companies that will be towing vehicles and may carry personal belongings. While in transit, it is difficult to predict what happens on the road.

This type of insurance covers any damages or loss to personal belongings, which can go a long way in instilling trust in customers and boosting your reputation as a tow trucking company.

Together, these three insurance coverages make a trucking business reliable. As the road is always unpredictable, these measures taken by a trucking business show that their tow trucking service can offer financial security and that the company cares for the customers.

Who Needs Tow Truck Insurance?

Any trucking business that tows or transports vehicles as a form of business or service needs insurance for tow trucks.

Such trucking businesses include roadside service providers, auto body shops, auto mechanical repair shops, auto salvage and auction haulers, and auto club contractors. 

How Much Does Tow Truck Insurance Cost?

There are various premiums for tow truck insurance. In 2020, the average premium for basic tow truck insurance or on-hook coverage for a single tow truck used for basic roadside and recovery towing was $450 per month or $5400 per year.

Meanwhile, the average commercial automotive insurance is $142 per month or $1,704 per year.

Together, these add up to approximately $600 per month or $7,100 per year, not including cargo insurance, which ranges from $680 to $982. Overall, tow trucking insurance costs between $1000 to $2000 a month for standard coverage.

Do note that insurance fees vary. If your tow trucking business offers basic roadside towing, you can get away with cheap commercial truck insurance.

However, if you specialize in towing a specific kind of vehicle or you cater to a higher-end clientele, then you will need to also spend more on your tow truck insurance.

Insurance for Tow Trucks

If you’re looking for tow truck insurance for your trucking business, you can get started with cheap commercial truck insurance.

We make your commercial truck safety our priority. Let us help keep your drivers and trucks safe, so you can focus on your business.

With over 20 years of industry experience, we know how to provide you with the best rates and insurance plans according to your needs.

To get a free quote, contact us at Strong Tie Insurance today!