A towing business has an unusual responsibility.
You are operating your own commercial vehicle while taking responsibility for somebody else's vehicle.
That creates two separate questions:
This guide separates the tow truck’s own coverage from the coverage questions surrounding customer vehicles, roadside services, and storage.
Who needs tow truck insurance?
Tow truck insurance may apply to businesses providing:
- Local towing
- Roadside assistance
- Vehicle recovery
- Accident towing
- Private-property towing
- Police rotation towing
- Dealer towing
- Repossession-related towing
- Heavy-duty towing
- Light-duty towing
- Winching
- Jump starts
- Lockout service
- Tire changes
- Fuel delivery
- Vehicle storage
Different services create different exposures.
The insurance needs of a single light-duty rollback operation may be significantly different from a towing company operating wreckers, storage lots and heavy recovery equipment.
Commercial auto liability
Tow trucks spend significant time on public roads.
Commercial auto liability can help protect the business when an insured vehicle is involved in a covered accident causing bodily injury or property damage.
Underwriters may consider:
- Truck type
- Truck weight
- Operating radius
- Towing radius
- Driver records
- Years in business
- Claims history
- Number of trucks
- Types of vehicles towed
- Contracts
- Hours of operation
- Roadside exposure
On-hook towing coverage
One of the most important distinctions in tow truck insurance involves the customer's vehicle.
On-hook towing coverage can help protect a customer's vehicle from certain covered damage while it is being towed by the insured tow truck.
That is a different exposure from damage involving your own tow truck.
A towing company should understand:
- Its on-hook limit
- Deductible
- Covered causes of loss
- Vehicle types handled
- Maximum value of vehicles towed
- Territory
- Policy exclusions
If your company occasionally tows expensive vehicles, the limit should be evaluated against the actual vehicles you handle.
Garagekeepers coverage
What happens when the customer's vehicle is no longer attached to the tow truck?
Towing companies that store, park or otherwise take custody of customer vehicles may need to review garagekeepers coverage.
Garagekeepers and on-hook towing address different portions of the risk.
This distinction becomes especially important for towing operations with storage yards or facilities.
Physical damage
Tow trucks and recovery equipment can represent a major capital investment.
Physical damage coverage can help protect insured trucks against covered collision and comprehensive losses.
Truck value, attached equipment and aftermarket modifications should be disclosed accurately.
General liability
A towing business can have liabilities that do not arise from driving.
General liability may help address certain covered third-party claims connected with business premises and operations outside the normal auto exposure.
Workers' compensation
Tow operators work in difficult environments.
Highways.
Road shoulders.
Accident scenes.
Parking lots.
Bad weather.
Nighttime calls.
Vehicle recovery sites.
Workers' compensation should be reviewed based on the business's employees and applicable state requirements.
Roadside assistance insurance
Roadside businesses may provide more than towing.
Services can include:
- Battery jumps
- Tire changes
- Fuel delivery
- Lockouts
- Winching
- Minor roadside assistance
Each service can create its own operational exposure.
Tell the insurer what the business actually does.
Do not describe an operation as “towing only” if technicians are regularly performing additional roadside services.
Vehicle recovery operations
Recovery work can involve damaged vehicles, unusual locations, specialized equipment and more complex working conditions.
Operations involving heavy recovery, rotators, commercial vehicles or specialized equipment should be explained clearly during underwriting.
What affects tow truck insurance cost?
Factors may include:
- Number of tow trucks
- Type of trucks
- Truck value
- Driver experience
- Motor vehicle records
- Claims history
- Operating radius
- Type of towing
- Roadside services
- Storage operations
- Police or municipal contracts
- Vehicle values handled
- On-hook limits
- Garagekeepers limits
- Hours of operation
- Coverage limits
- Deductibles
Towing insurance should follow the vehicle from pickup to release
Think about the complete chain.
Your tow truck arrives.
The vehicle is connected.
The vehicle is transported.
The vehicle may be stored.
The vehicle is eventually released.
Different insurance coverages can apply at different stages.
A complete towing insurance review considers each stage, rather than assuming one commercial auto coverage answers every question.
Document the complete chain of responsibility, including any storage or subcontracted work.
Coverage comparison
| Situation | Review area | Question to ask |
|---|---|---|
| Driving the tow truck | Commercial auto liability | Which insured vehicles, drivers, and uses are described? |
| Damage to the tow truck | Physical damage | How are the truck, recovery equipment, value, and deductible addressed? |
| Customer vehicle being towed | On-hook or applicable customer-vehicle coverage | What causes of loss, vehicle values, limits, and exclusions apply? |
| Customer vehicle held at a yard | Garagekeepers or applicable custody coverage | Which locations and custody arrangements are addressed? |
| Roadside services | The relevant policy forms for those activities | Are lockouts, jumps, tire changes, winching, and fuel delivery accurately described? |
A practical example
Example: a towing company adds overnight storage
A towing operator begins holding recovered vehicles overnight instead of delivering every vehicle directly to a repair shop. Record the storage location, maximum number of vehicles, security arrangements, and maximum combined value. Ask how the policy addresses that custody period. The coverage question changes when the customer’s vehicle leaves the tow truck, even though the customer and towing job remain the same.
Common mistakes to avoid
Treating on-hook and storage protection as interchangeable
Read the actual covered activities and locations. Product names and policy wording vary; Progressive notes different terminology in Texas and Virginia. A label alone does not establish when protection applies.
Understating the value of customer vehicles
Use the highest-value vehicles the business actually handles, not only the average local tow, when evaluating limit questions.
Leaving roadside work out of the description
A towing-only description can miss battery jumps, tire changes, lockouts, and other services performed during the same shift.
Your document review checklist
Use these prompts to organize your documents and identify unanswered questions. Completing the list does not confirm coverage.
Frequently asked questions
What insurance does a tow truck company need?
A towing operation may need commercial auto liability, physical damage, on-hook towing, garagekeepers, general liability, workers' compensation and other coverage depending on its operation.
What is on-hook towing insurance?
On-hook coverage can help address certain covered damage to a customer's vehicle while that vehicle is being towed by an insured tow truck.
What is the difference between on-hook and garagekeepers coverage?
On-hook coverage generally relates to a customer's vehicle while being towed. Garagekeepers coverage may apply to customer vehicles held in the business's care at a location or storage facility, subject to policy terms.
Does roadside assistance need commercial insurance?
Businesses performing roadside assistance should disclose those services when applying for insurance so the operation can be evaluated accurately.
What should a new towing company document before starting?
Prepare the truck and equipment schedule, services offered, towing radius, driver information, maximum customer vehicle values, storage arrangements, and contract requirements. Identify where each stage of work is addressed in the policy.
Sources and further reading
Insurer explanations distinguish towing-related customer vehicle coverage from protection for vehicles held at a business location. The policy’s definitions and terms control; terminology can vary by state.
- Progressive: on-hook towing coverage
- Progressive: garagekeepers coverage
- NAIC: small business insurance
This guide explains general insurance considerations. Policy wording, exclusions, state requirements, and the facts of an operation determine what applies.