If you are under the impression that normal insurance coverage is enough to cover your risk in a towing business, you might be mistaken. The risks involved in the towing business are very different from those faced by personal vehicles or even other commercial vehicles. Thus, one must also purchase special insurance to cover these types of risks.
A towing contractor deals with a third-party vehicle on a daily basis. These vehicles are already in a state of dilapidation and thus the risks of further damage are high. Thus, it is always wise to secure yourself against these significant risks.
In case you’re in Calgary and looking for comparative insurance quotes, do not forget to visit Surex.
Why Do Towing Contractors Need Special Coverage?
The towing business is different from other commercial businesses. Towing contractors deal primarily in cars and vehicles, thus increasing the probabilities of risk associated with them. Here are a few reasons why towing contractors need special coverage:
- Towing services are often summoned during tough working conditions, such as during bad weather or on a busy highway. These factors compound to increase the chances of any mishappening.
- Contractors are often required to tow cars after an accident. There can be broken glasses and sharp metal edges scattered in and around the car. The chances of injury of the staff at work increase in such cases.
- Even statistically, tow truck drivers are at double the risk of being injured. Thus, adequate insurance might do good for the unforeseeable losses.
Insurance Coverage for Towing Vehicles
Apart from the mandatory third-party liability insurance, businesses need to purchase other insurance according to their field of operation. A towing company would normally purchase commercial insurance to guard against business risks, but a Texas tow truck insurance protects your towing business from lawsuits. However, certain types of insurance would come in handy if you are in the tow truck business:
On-hook liability
The on-hook liability provides protection against any damage caused to a third-party vehicle while being towed. There is always a possibility of damage being caused to a vehicle, while it is being towed. Thus, the on-hook liability insurance ensures that your business does not take a serious financial hit if this happens.
You’ll typically be required to choose the limit of insurance you desire. This would depend on your past experiences and the area you operate in. If past records show that your company is prone to such incidents, it is always advisable to set a higher limit. However, a higher limit would result in higher premiums as well. Thus, you’d have to do a proper cost-benefit analysis before arriving at a decision.
On-hook liability cannot be purchased on a standalone basis. You’d have to purchase liability insurance before. Thus, on-hook insurance adds as an add-on to your existing policy.
What Does On-hook Liability Not Cover
- The on-hook insurance is meant specifically for towing companies. One cannot purchase this for towing his own vehicle.
- This insurance would not cover towing of race cars or antique cars for personal use since these types of cars are more prone to damage.
Garage keeper Insurance
This insurance provides coverage against damages that might occur to customers’ vehicles while being repaired or while it is in the garage. While this is not insurance specific to only towing contractors, this comes in handy in unforeseen situations.
Towing companies might have to keep third-party vehicles on their property before they are sent to their destination or to the junkyard. The possibilities of damage in this period cannot be ignored. Thus, if any damage occurs to the vehicle during this short period, the garage keeper’s insurance would come to your rescue.
This is different from comprehensive coverage. While comprehensive coverage would cover non-accident damages caused to your own assets (vehicles), the garage keeper’s insurance is meant exclusively for customer’s vehicles.
Trucking Liability Insurance
Tow Trucks are ‘trucks’ in the first place. This makes it mandatory for the tow-truck owners to get trucking liability insurance. This works on the same lines as personal third-party liability insurance. It provides protection against the damages that might be caused to thief-party properties while on the road.
There may arise a situation where your truck is involved in an accident causing damage to another vehicle. This would entail costs for both property damage and medical costs of the injured third party. The trucking liability insurance comes in handy in such situations as it would cover a sizable chunk of the costs, depending on the limits.
Some Other Insurance
Apart from the above important insurances, here are a few additional insurance coverages you can opt for for your towing business.
Physical Damage Coverage
This type of insurance is a blend of conventional collision and comprehensive coverage. It would provide financial protection if your vehicle is damaged in an accident or otherwise by a falling tree, theft, or vandalism. However, this would only cover damages to the vehicle and not your medical costs.
Uninsured Motorist Coverage
If you are a victim of a hit and run case or involved in an accident with a driver who has either has no third-party liability insurance or the limit of insurance is not sufficient to cover your damages, the uninsured motorist coverage would have your back.
How much does Towing Vehicle Insurance Costs
If you zero in the comprehensive risks involved in the towing business, the premiums for towing vehicle insurance are generally higher than normal personal insurance or commercial insurance. However, this should not deter you from purchasing a policy as it is for the long-run benefit of your own business.
However, if you have a history of very few claims, insurance providers would offer you discounts on premiums. Here are a few ways of reducing claims:
- Ensure proper and regular servicing and maintenance of your tow trucks.
- Train your drivers properly. They should be well-versed with the dos and don’ts while on the road.
Endnote
After having understood the importance and types of towing vehicle insurance, one should not have second thoughts about purchasing one. There is nothing like working with the cushion of protection from unprecedented events, especially in the towing business, where the risks involved are higher.
Make sure you visit multiple insurance providers, compare quotes and avail all available discounts before arriving at a decision.