Tow Truck Insurance: Coverage, Cost and Top Options
Towing businesses often need non-truck-related business insurance, such as general liability and workers’ comp.
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Contributing Writer Having the right tow truck insurance ensures your business is financially protected from lawsuits and damage.
- Federal law requires all tow trucks over 10,000 pounds to have auto liability insurance, though limits on minimum coverage vary from state to state.
- Some states also mandate medical payments coverage.
- Landlords generally require you to have general liability insurance and commercial property insurance.
- If you have employees, most states require workers’ compensation insurance.
Those are the policies you’ll need. But you’ll likely want additional options, like garage keepers insurance and on-hook coverage.
Here’s what to know about tow truck insurance, including where to get it.
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Best tow truck insurance companies
NerdWallet’s editorial team chooses the best business insurance based on factors like:
- Relative number of complaints policyholders make to state regulators.
- Each company’s financial strength, or how well they can pay claims.
- How easily you can buy a policy online.
We reviewed the top carriers for companies that offer policies tow truck drivers would value most. Here are some top options to consider.
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The Hartford
Towing businesses can likely find all the coverage they need at The Hartford, which writes a dedicated tow truck policy. Available coverages include commercial auto, on-hook, garage keepers, workers' comp and garage liability.
The Hartford is financially strong, and consumer complaints are on the low side for its size. You may be able to get a quote online, but to buy a policy you'll need to work with an agent. Read our review of The Hartford.
Progressive Commercial
You can get a quote online for tow truck insurance from Progressive, including commercial auto policies with on-hook and garage keepers coverage options. If you operate across state lines, Progressive will handle FMCSA filings on your behalf.
However, Progressive specializes in commercial auto coverage and doesn’t sell its own workers’ comp, general liability or commercial property policies. For those and others, Progressive will find your coverage through a different provider. Read our review of Progressive business insurance.
Prime Insurance
NerdWallet has not rated Prime Insurance.
Prime Property & Casualty Insurance offers customized coverage for tow truck drivers, including those who have a history of accidents or a high rate of past claims. The company has an "excellent" financial strength rating from AM Best. Coverage is limited to just 10 states, though.
Prime is a surplus lines carrier, which means it operates outside the standard insurance industry. Surplus carriers are more likely to work with companies other insurers won't. For instance, Prime covers high-risk businesses, such as tow truck companies that specialize in repossession. But surplus carriers may have more exclusions and be more expensive. For that reason, they're often an insurer of last resort.
What is tow truck insurance?
Tow truck insurance typically refers to a package of insurance policies that protect your business financially from common risks. These can include:
- A driver or truck that is hit on the side of the road by a passing vehicle.
- A tie-down slips, denting a vehicle you’re towing.
- A tech backs into a rear bumper while moving cars between bays.
- Your driver is in a road accident while towing a vehicle to your shop.
- You repossess the wrong vehicle and are sued.
- Antifreeze leaks into the road from your shop, triggering cleanup and a lawsuit.
- A customer trips over your wheel-lift cables while you're working on their vehicle.
- Your computers are hacked and your customers’ data is exposed.
What types of insurance do tow truck businesses need?
General liability with garage liability coverage
General liability insurance covers bodily injury and property damage to non‑employees from your tow truck operations. That can include people who visit your office or walk through your lot, or a third party who’s hurt because of your work at a scene.
Garage liability insurance extends this protection to cover accidents involving customers’ vehicles while they’re in your care. Normally, general liability excludes such damage.
Here are some examples of what general and garage liability cover together:
- Bodily injury. A customer walks through your lot, trips in a pothole and breaks an ankle.
- Property damage. A driver accidentally scrapes a fence while maneuvering a customer’s SUV on your property.
- Advertising injury. A competitor claims your online ad falsely says they overcharge customers.
- Garage liability. An employee test‑drives a customer’s car after a jump start and rear‑ends another vehicle.
Garage liability insurance only pays out to third parties, or non‑employees. It doesn’t cover damage to your own trucks or buildings, or injuries to your employees. It also doesn’t cover damage to customers’ vehicles themselves.
Commercial auto insurance
Commercial auto insurance covers your tow trucks and drivers’ liability. It includes coverage for injuries and property damage you cause to others, and typically physical damage coverage for your own trucks.
All states require auto liability insurance for tow trucks. Collision and comprehensive coverage pay for damage to your tow truck due to most causes and are not mandatory, but recommended. Without them, your business would have to pay to replace your tow truck if it was stolen, destroyed or damaged.
For example, say a driver is responding to a roadside call and rear‑ends another car while changing lanes. Commercial auto liability helps pay for the other driver’s medical bills and vehicle repairs, plus your legal defense if they sue. It can also help pay to repair your tow truck as long as you have collision coverage.
Garage keepers insurance
Garage keepers insurance covers damage to a customer’s vehicle while it’s in your lot, yard or storage area. If you store vehicles after a tow, run an impound lot or keep cars overnight, you’ll need garage keepers insurance.
Garage keepers policies can cover damage in three different ways:
- Legal liability. This version pays only when you’re legally responsible for the damage. It excludes weather, theft and vandalism, for instance.
- Direct primary. This pays regardless of fault and can cover theft, vandalism and many weather events, up to your policy limits.
- Direct excess. This type also pays regardless of fault, but only after the customer exhausts their own insurance.
For example, say your driver damages a customer’s car while parking it in your lot. All three types can help cover the repair. But if a storm drops a branch on several cars, only a direct policy will cover the damage. And a direct excess policy will only kick in after the customer’s comprehensive insurance pays.
On-hook coverage
Commercial auto coverage doesn’t usually pay for damage to the vehicle you’re towing, so you’ll need on-hook insurance. Sometimes called on‑hook towing or on‑hook cargo liability, this covers damage to a customer’s vehicle while you tow it. It applies from the moment you hook up the vehicle until you remove it from your truck.
For example, say you’re hauling a sedan on a flatbed and another driver cuts you off. You brake hard, the sedan shifts and its bumper and suspension are damaged. On‑hook coverage can pay for those repairs.
Workers’ compensation insurance
Workers’ compensation insurance helps pay medical bills, lost wages and rehabilitation costs if an employee is hurt or sickened because of work. Nearly every state requires it if you have employees, but it’s also a good idea for sole proprietors. Most health plans exclude work‑related injuries, and won’t cover lost wages at all.
Medical payments coverage from commercial auto insurance can pay for costs from a road accident, but it may not be enough for serious injuries. Workers’ comp would pay for employees’ injuries in a job-related car accident.
Say a driver slips while hooking up a car and injures her back, taking her out of work for weeks while she recovers. Workers’ comp pays for her medical bills, therapeutic costs and a portion of her lost wages.
Commercial property insurance
This policy covers your physical location such as your office, shop, tools and certain equipment. Commercial property insurance usually covers fire, theft, vandalism and storms, though it usually excludes flooding and earthquakes.
Commercial property insurance typically includes business income insurance. This coverage can help pay ongoing costs — like payroll, rent and utilities — while you repair or relocate if a covered disaster forces you to slow or stop operations.
Say a severe storm damages your building, and you can’t dispatch from your main office for several weeks. Commercial property insurance can help pay for the repairs to your building. Business income coverage can cover some lost income and ongoing expenses such as rent and payroll during the downtime.
This coverage usually applies to property at your business location; separate coverage may be needed for tools and equipment kept in trucks or at off‑site yards, depending on your policy.
Other types of tow truck business insurance
| Policy type | Coverage details |
|---|---|
| Tools and equipment insurance | Covers equipment like chains, straps, dollies, J-hooks and other recovery tools while in transit, on a recovery scene or stored. Commercial property usually only covers items at your business address. Say a recovery job runs long and a kit of straps and dollies is stolen while the driver is unhooking. Tools and equipment coverage helps pay to replace them. |
| Equipment breakdown coverage | Pays to repair or replace motorized or electrical equipment that fails. Say a power surge fries your dispatch system and the rotator's hydraulic controls. Equipment breakdown helps pay for the repairs. |
| Bundles general liability with commercial property and business interruption coverage, often at a lower cost than buying them separately. That can make it a good choice for businesses with physical locations. Just make sure you can customize a BOP with appropriate add-ons for your towing business. | |
| Wrongful repossession liability | Covers legal costs if you repossess the wrong vehicle and are sued. Say a driver repossesses a vehicle whose loan was reinstated 30 minutes earlier, and the owner sues. Wrongful repo coverage helps with the legal defense and any judgment. |
| Pays costs from data breaches, ransomware and other cyberattacks. It’s worth a look if you use dispatch software, motor club portals or accept card payments. Say your dispatch system is hit with ransomware, exposing customer payment data. Cyber insurance helps with the investigation, customer notifications and legal fees. | |
| Adds extra liability coverage on top of your current business policies’ limits. Consider it if you routinely tow high-value vehicles or have a large company. Say a multi-vehicle crash judgment exceeds your $1 million commercial auto limit by $1.5 million. Umbrella helps pay the rest, up to its limit. |
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What to watch out for in tow truck insurance
Every insurance policy has exclusions and limits. Some can catch tow operators off guard at claim time. Read the fine print before you buy. Pay particular attention to:
- Garage keepers legal liability vs. direct. Make sure you know whether your garage keepers policy includes vandalism, hail and overnight theft. Only direct policies cover events out of your control.
- On-hook coverage caps. On-hook policies usually limit payouts on any single vehicle, say to $50,000 or $100,000. A single high-value car could blow through that amount and cost you. Ask about higher limits if you sometimes tow exotic, specialty or heavy-duty vehicles.
- State licensing and insurance requirements. States require tow operators to carry minimum coverage limits as part of licensing. Surety bonds may be required too. Check with your state to know what you need before you buy a policy.
How much is tow truck insurance?
The cost of tow truck insurance depends on your location, driving history and the type of towing you do. The coverage and limits you select will also factor into your annual premium.
Operating a tow truck is an inherently risky job. Drivers often work on busy roads and in inclement weather, so costs can get high.
You may be able to get cheaper business insurance by paying your annual premium in full instead of monthly. You could also opt for a higher deductible or bundle your coverage with personal auto insurance or other types of business insurance to save on costs.
How to shop for tow truck insurance
Follow these steps to understand your risks and compare quotes for the coverage your towing business needs.
1. Identify coverages and gather documentation
You’ll need policies that protect your liability, your trucks, customers’ vehicles in your care and your employees. Your shop or garage should be insured, as well as any tools and equipment you keep in the tow truck. Heavy‑duty towers may need higher limits and extra protection.
Next, gather the key details insurers need to provide a quote. You’ll need:
- Your business address, years in operation, estimated revenue and payroll.
- Information on each tow truck, including VIN, model year, value and where you park it overnight.
- Your towing radius and the mix of light‑duty and heavy‑duty jobs you perform.
- Your federal employer identification number (EIN) or If you’re a sole proprietor, your Social Security number (SSN).
2. Get multiple insurance quotes
There are three common ways to compare policies and prices for tow truck insurance.
- Work with an agent or broker. A licensed expert can explain coverage options, help you choose limits and spot gaps. They can collect quotes for you, but only from the companies they work with, and brokers may charge a fee.
- Contact providers directly. If you already know which towing specialists or national carriers you prefer, you can contact each one for quotes. This takes more time but gives you control over which insurers you evaluate.
- Use an online marketplace. Sites like Simply Business and Coverdash let you enter your details once, see several quotes and often buy the same day. This can work well for smaller or mostly light‑duty towing businesses, but you may end up with several different insurers and less one‑on‑one advice.
If your revenue is high or your company is large, you may not be able to buy a policy online.
3. Compare limits, exclusions and companies
Once you have quotes, look closely at the coverage limits and exclusions. Make sure liability limits are generous if you sometimes handle heavier recovery jobs or higher‑value vehicles. Check how each policy treats accident recovery, repossessions and storage lots, and what’s covered while vehicles are hooked up or stored.
Research each insurance company you’re considering also. You can check on complaint trends in your state from the National Association of Insurance Commissioners or your state’s insurance department. Read independent reviews and those on sites like the Better Business Bureau to see how companies handle service and claims.
4. Buy your policies and review periodically
After you choose your insurer and policies you’ll buy them online or through an agent. Log into your insurer’s online portal and find where you’ll pay premiums and download your certificate of insurance.
Plan to review your coverage at least once a year, or more often if your business changes in a big way. For example, evaluate coverage if you add or replace trucks, change your towing radius, hire more drivers or store more vehicles on your lot.
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