Towing Company Business Insurance

Use Insuranceopedia to match your towing company with business insurance quotes from leading carriers. This platform helps you find the right coverage for general liability, property damage, and employee safety.

Why Do Towing Companies Need Insurance?

Operating a towing service involves specific dangers that most other businesses do not face. Your team handles expensive vehicles on busy roads every day, which creates a high risk of property damage and bodily injury. Insurance is necessary to shield your company’s bank account from the financial impact of these daily hazards.

You also face the constant threat of liability. A simple mistake while hooking up a client’s car or a collision during transport can lead to a costly lawsuit. Without adequate coverage, your business would have to pay for these damages out of pocket. A strong policy, such as General Liability insurance, steps in to pay for legal fees, medical bills, and repairs if you are sued.

Finally, carrying insurance is often a matter of compliance and reputation. Most states require specific coverage limits for tow operators to legally conduct business. Furthermore, corporate clients and motorists are more likely to hire a service that can provide proof of insurance. Whether you are a solo operator or manage a large fleet, having the right protection allows you to work with confidence.

What Insurance Do Towing Companies Need?

Operating a towing service entails specific risks. You have to worry about road safety, the condition of client vehicles, and the well-being of your staff. To protect your company against financial loss from accidents or lawsuits, you should review the following types of business insurance options.

Commercial Auto Insurance

Personal car insurance usually excludes business activities. If you or your drivers are involved in an accident while working, you need a commercial policy to cover the costs. This pays for vehicle repairs, medical bills for injuries, and liability if your truck causes damage to others.

Example: Your driver hits another car while heading to a breakdown site. Commercial auto insurance pays for the damages to both vehicles and medical costs for the other driver.

On-Hook Coverage

This is a specific coverage designed for the towing industry. It protects a customer’s vehicle while it is attached to your truck. If you damage a client’s car during transport, this policy covers the repair costs.

Example: You are towing a sedan and accidentally back into a pole, smashing the sedan’s bumper. On-Hook coverage pays for the repairs to the client’s car. Professional liability coverage like this often costs around $98 a month.

General Liability Insurance

This is the starting point for most small business protection. It covers injuries to third parties or damage to their property that does not involve your vehicles. If a bystander gets hurt because of your business operations, this policy handles legal fees and medical bills.

Example: A customer visits your dispatch office and slips on a wet floor. General liability pays for their medical treatment and any resulting lawsuit.

Gatekeepers Insurance

If you store vehicles overnight or hold them in a lot, you are responsible for their safety. Gatekeepers’ insurance protects customer cars while they are in your care, custody, or control at your facility.

Example: A client’s car is parked in your secure lot overnight, and a vandal breaks the window. This policy helps pay for the damage.

Workers’ Compensation Insurance

Most states require this coverage if you hire employees. It pays for medical care and lost wages if a worker gets hurt or sick on the job. It also protects the business owner from lawsuits related to workplace injuries.

Example: An employee strains their back while loading a motorcycle onto a flatbed. Workers’ compensation covers their doctor visits and physical therapy.

Cargo Insurance

This is vital for flatbed operators. While On-Hook covers cars being towed, Cargo insurance covers property and vehicles hauled as freight. It protects you against loss or damage to the items you are transporting.

Example: You are hauling a luxury car on a flatbed and a strap snaps, causing the car to slide and sustain damage. Cargo insurance covers the cost of the repairs.

Uninsured/Underinsured Motorist Coverage

Sometimes an accident is not your fault, but the other driver cannot pay for the damage. If a driver hits your tow truck and they have no insurance or low coverage limits, this policy steps in to pay for your repairs and medical costs.

Example: A driver runs a red light and hits your truck. They have no insurance. Your uninsured motorist policy covers the damage to your vehicle.

Wrongful Repossession Insurance

If your company performs repossessions, you face a high risk of lawsuits claiming negligence or error. This insurance covers legal defense and settlements if a vehicle owner sues you over the repossession process.

Example: You repossess a car, but the owner claims you failed to notify them properly or damaged personal property inside the car. This policy covers the legal costs.

Umbrella Insurance

Standard policies have financial limits. If a massive lawsuit exceeds those limits, you have to pay the difference out of pocket. Umbrella insurance provides extra coverage that kicks in once your other policies are maxed out.

Example: A major accident leads to a lawsuit for $1.5 million. Your auto policy only covers up to $1 million. The umbrella policy pays the remaining $500,000.

Business Owner’s Policy (BOP)

A BOP is a package deal. It combines general liability and commercial property insurance into one bundle. This is often cheaper than buying the policies separately and covers your building, equipment, and liability risks.

Example: A pipe bursts in your office, ruining your computer and furniture. The BOP helps pay to replace your office equipment and covers the water damage repairs.

Commercial Property Insurance

This protects the physical assets you own or lease. It covers your dispatch office, garage, and storage buildings against risks like fire, theft, and storms.

Example: A severe storm tears the roof off your garage. Commercial property insurance pays to repair the building structure.

Cyber Liability Insurance

Towing companies often store sensitive client data like credit card numbers and addresses. If hackers breach your system, this insurance pays for legal fees, customer notification, and credit monitoring.

Example: Your billing system gets hacked, and customer credit card data is stolen. Cyber liability pays for the costs associated with the data breach.

Business Personal Property (BPP) Insurance

While property insurance covers the building, BPP covers the movable items inside it. This includes tools, computers, desks, and other equipment used to run your business.

Example: Someone breaks into your office and steals your dispatch computers. BPP covers the cost of replacing the stolen electronics.

Hired And Non-Owned Auto (HNOA) Insurance

This coverage is for vehicles your business uses but does not own. If an employee uses their personal car to run a work errand and causes an accident, your business could be liable. HNOA protects the business in these situations.

Example: You send an office manager to the bank in their own car to deposit checks, and they hit a pedestrian. HNOA covers the liability claim against your business.

Cheapest Towing Company Commercial Auto Insurance

The cheapest option for Commercial Auto Insurance is BiBerk, with an average annual cost of approximately $4,152.

Note: Estimates are based on a single tow truck operation with a clean driving record and standard liability limits (typically $750,000 – $1,000,000 combined single limit). Actual premiums will vary based on driver age, location, radius of operation, and specific vehicle weight class.

Cheapest Towing Company General Liability Insurance

The cheapest option for General Liability is BiBerk, with an average annual cost of approximately $784.

Note: Estimates are based on a small towing business with standard limits of $1 million per occurrence / $2 million aggregate. Actual premiums will vary based on revenue, payroll size, and whether the business performs additional services like repossession or auto repair, which significantly increase risk exposure.

Cheapest Towing Company Business Owner’s Policy

The cheapest option for a Business Owners Policy (BOP) is BiBerk, with an average annual cost of approximately $1,083.

Note: Estimates are based on a bundled policy including General Liability and Commercial Property coverage for a small office/lot. Actual premiums will vary depending on the value of the property insured, deductible choices, and location. Note that many carriers may require a separate package policy rather than a standard BOP for towing operations due to the high-risk nature of the industry.

How Much Does Towing Company Business Insurance Cost?

Towing businesses typically spend about $59 a month for general liability insurance. Your actual business insurance rate depends on factors like the size of your trucks and the specific type of towing you perform. The state where you operate matters too, since local laws set the minimum limits for commercial auto liability.

The total price also changes based on your coverage limits and if you bundle multiple policies. It is often tempting to pick the cheapest option. However, you need to make sure your plan covers the specific risks your business faces.

Note: These estimates are based on national averages for small-to-mid-sized towing operations with standard risk profiles and clean claims histories. Actual premiums will vary significantly based on your specific location, number of vehicles, driver records, coverage limits, and deductible choices.

How Is Your Towing Company Business Insurance Cost Calculated?

Insurance providers look at several distinct risk factors to decide your premium. The most important consideration is the type of towing services you offer. For example, moving cars across state lines carries different risks than towing a disabled vehicle to a local repair shop.

Specific coverages will also affect the price. You may need On-Hook Towing or Garagekeepers insurance to store customer vehicles legally. These add to your total costs. State laws play a big role as well. Some states require liability limits that are higher than the federal minimums, which increases your rate.

The size of your company is another key detail. If you have many employees or a large fleet, your exposure to risk increases. Your location matters just as much. Rates are often higher in areas with dense traffic, severe weather, or high crime rates.

Underwriters also check your track record. If you have filed claims in the past, your rates will likely be higher. Finally, details like your business structure and the total value of your equipment help determine the final price.

Following these steps helps ensure you’re properly insured and set up to handle risks confidently and professionally.