When people hear the words “insurance policy”, they often think of auto, home, and medical. It’s only natural because that’s what we hear about most often. However, most people don’t know that if you own a tow trucking business, tow truck insurance is required.

If you own a business which requires the use of a tow truck, including repair shops and auto salvage businesses- you are required to carry commercial tow truck insurance. Commercial tow truck insurance is regulated by all 50 states and federal policy.

In this article, we’ll discuss everything you need to know about tow truck insurance.

Types of Businesses Required to Carry Tow Truck Insurance


Tow truck drivers of any type in any state are required to carry tow truck insurance. The requirements may be different in every state but federal requirements are the same across the board and they apply 100 percent of the time. Here are some businesses required to carry tow truck insurance and comply with federal law.

  • Towing & Repossession Services
  • Auto Repair & Body Shops
  • Full-Service Garages
  • Roadside Assistance Services
  • Salvage & Auction Companies

This is not a full comprehensive list, but you get the idea. It only takes one tow truck offering services to get on this list. Not every auto repair shop will be required to carry tow truck insurance but if they have a tow truck in operation, even just to transport equipment, then they are required to carry it.

Why Is Tow Truck Insurance Required?


Tow truck insurance is much like auto insurance in many respects. At first glance it may seem odd that some of these companies are required to carry tow truck insurance. It is required not only to protect you and your business, but it puts protection in place for the people around you and the ones you do business with.

There are many different policy options for tow truck insurance, such as coverage for property damage, bodily injury and more. Some protections are required while others are more specialized. Each tow truck insurance policy is built specifically for the tow truck and operator or business that it will be covering.

Tow truck industry drivers have an on the job fatality rate that is 15 times higher than any other profession, according to the Bureau of Labor Statistics. This makes tow truck insurance an absolute necessity rather than just an option because it is protection for those drivers as well as the people and property around them.

Types of Tow Truck Insurance Provisions


As earlier stated, some policy protections are required while others are optional or even more specialized. The types of tow truck services offered along with the number of employees will help dictate tow truck insurance requirements. The state where services are being offered will also have their own stipulations.

Below are some of the more common provisions in tow truck insurance policies. This is not all of them, but these are most of the more common coverage options considered in tow truck insurance policies.

  • Bodily Injury Liability Coverage – The coverage amount varies by state but bodily injury liability coverage pays when a tow truck driver causes injuries to another in an at-fault accident.
  • Property Damage Liability Coverage – This coverage pays for physical damage to another’s property in an at-fault accident. While property damage liability coverage pays for physical damage to another’s property, it does not cover any vehicles which may be being towed at the time.
  • On-Hook Towing Coverage – On-hook towing coverage pays for damages to a vehicle due to fire, theft, collision, or vandalism while it is being towed. However, it does not apply to personal vehicles. If a personal vehicle you own, or one owned by the company, is being towed somewhere, then on-hook towing coverage does not apply, and you cannot collect for damages that occur.
  • Motor Truck Cargo Coverage – Some insurance companies distinguish between flatbed tow trucks and others, such as hook and chain tow trucks. Motor truck cargo coverage is a type of tow truck insurance which is the equivalent of on-hook towing coverage, only it’s for flatbed tow trucks.
  • Garage Keepers Liability Coverage – This is the policy protection which offers coverage for someone else’s property while it is being housed in your garage, personal or professional. Garage keeper’s liability coverage is required in some states but optional in others so it’s always good to ask because laws can change over the years, too.
  • Wrongful Repossession Coverage – Wrongful repossession coverage pays if a tow truck driver accidentally repossessed the wrong vehicle. This could be an honest mistake by an over zealous tow truck driver or sometimes vehicles are mistakenly reported for repossession when they shouldn’t be. This coverage also pays for physical injury and offers protection from frivolous lawsuits when an individual becomes violent during a repossession. Tow truck companies typically combine this coverage with worker’s compensation insurance and occupational accident insurance to create the best tow truck insurance for their drivers.
  • Worker’s Compensation Insurance for Truckers – This coverage offers protection for tow truck drivers who may be injured on the job. It helps pay for lost wages and medical bills. If a company hires tow truck drivers as full-time employees, then they are required to carry worker’s compensation insurance for truckers.
  • Occupational Accident Insurance for Truckers – Occupational accident insurance for truckers is very similar to worker’s compensation insurance for truckers but it is less comprehensive, meaning it doesn’t pay as much. On the bright side it is also much more affordable. Tow truck drivers who work as independent contractors typically carry this insurance on themselves. Many companies who hire tow truck drivers as independent contractors also offer occupational accident insurance for truckers.

Tow Truck Insurance Is Comprehensive and Necessary

As you can see, there’s a lot to tow truck insurance and the types of coverage that are available. Driving without adequate tow truck insurance is illegal and dangerous because you can have your driver’s license, business license, and registration suspended. Do things the right way and partner with a reputable company that can get you the tow truck insurance you need.