The Best Tow Truck Insurance Companies for 2023

Commercial tow truck insurance protects businesses that generate income by transporting disabled vehicles. This guide will cover all the information that towing business owners and contractors should know when buying tow truck insurance, including what the insurance covers, how policies are structured, towing insurance rates, and how to compare insurance providers.

Before getting into the details of how this insurance works and factors to consider, here is a preview of our top tow truck insurance providers:

	Progressive	Liberty Mutual	Prime
Best for	Best Overall	Runner-Up	Repossession
Financial Strength	Excellent	Excellent	Excellent
Customer Reputation	A+	A+	A
Our Rating	10/10	9.5/10	9.5/10
Learn More	View Rates Read Review	Get Quote Read Review	Get Quote Read Review

*By clicking the above links, you will go to one of our insurance partners. The specific companies listed above may not be included in our partner’s network at this time.

Understanding Tow Truck Insurance

When researching policies, it is important to understand what types of coverage are required by state and federal law, as well as how much coverage the towing business needs. This guide will start with an overview of the coverage, costs, and legal requirements associated with commercial tow truck insurance. Then we’ll review some of the main factors to consider when choosing an insurance provider, as well as our top recommendations.

What Is Tow Truck Insurance?

Tow truck insurance refers to a series of commercial auto insurance policies that provide financial and legal protection for businesses that earn income by towing other vehicles. Tow truck insurance usually includes coverage for bodily injury and property damage, as well as additional coverage for the vehicles being towed and stored.

Tow truck insurance is a specific type of commercial auto insurance designed to provide financial and legal protection for towing businesses. A towing business uses vehicles such as flatbeds, wheel-lifts, and integrated tow trucks in order to transport vehicles from one location to another. Since tow trucks are used as part of a business, they are not covered under personal auto insurance. 

Tow trucks carry some unique risks compared to other types of commercial vehicles. Tow truck businesses are not only responsible for their own vehicles, but also for the vehicles that they are entrusted with towing. As a result, coverage tends to be more specialized than that of a regular commercial auto insurance policy. 

How Does Tow Truck Insurance Work?

Anyone who owns a tow truck for a business purpose will need to purchase tow truck insurance. This applies to sole proprietors with a single truck, large corporations with fleets of trucks, and everything in between. Some examples of businesses that might need commercial tow truck insurance include roadside service providers, auto body shops, auto mechanical repair shops, auto salvage and auction haulers, auto repossession businesses, and full service stations.

The business owner is responsible for buying the tow truck insurance policy, regardless of whether or not they are the person behind the wheel. Business owners should select a series of coverages that will insure the truck, the driver, the business itself, and any individuals or property that could be harmed as a result of tow truck activity. When choosing a policy, the business owner must work with an insurance company representative to determine the policy, coverage, premium, limits, deductible, and system for filing claims. These elements are defined as follows:

• Policy / Coverage – the incidents, damages, and expenses that an insurer will cover 
• Deductible – the amount of money that the company must pay out-of-pocket toward a claim before the insurer will cover any remaining expenses 
• Policy Limit – the maximum amount of money that the insurer would pay toward covered incidents; anything above this amount is the insured’s responsibility
• Monthly Premium – what the policy costs each month
• Claims – a request that a policyholder submits in writing to an insurance company in order to receive compensation for a covered incident

A “covered incident” refers to an accident, monetary loss, or other event specifically listed in the insurance policy that would require the insurance company to pay expenses for damages directly, or provide reimbursements to the policyholder. Depending on the coverage that a policyholder has, a covered incident might pay for expenses related to drivers, their passengers, and other individuals or property harmed as a result of the incident. Different types of incidents are covered under different types of coverage for towing insurance so policies almost always include multiple coverages.

What Does Tow Truck Insurance Cover?

A tow truck insurance policy is composed of several individual coverages that protect different individuals, property, or entities associated with a towing business. This includes the tow truck driver, the tow truck, the vehicle being towed, the passengers, the business’s customers, the other drivers or motorists involved in an accident with the tow truck, the others’ property when involved in an incident with the tow truck, and the business itself.

Tow truck insurance policies also list several specific types of incidents that can be covered under tow truck insurance. These include accidents or collisions that occur on the road or in a garage; damage due to fire, theft, or vandalism; and even some types of lawsuits against the business, such as slander or discrimination.

Tow truck insurance coverage is divided into several different policy options that can be purchased separately to fit coverage to the needs of tow truck businesses. Most of these overlap with a more general commercial auto or commercial truck insurance policy, with some additional options that are specific to tow trucks. Here are the main coverage options available in a tow truck insurance policy.

Bodily Injury Liability

Bodily injury liability coverage pays for expenses associated with the injuries caused to another person in an accident in which the tow truck is at fault. All states require tow trucks to have bodily injury liability coverage, although the coverage minimums will differ from state to state.

Any insurer that offers tow truck or commercial auto insurance will provide bodily injury liability coverage. Most insurers combine bodily injury liability and property damage liability into one coverage, commonly referred to as primary liability or auto liability coverage. In most states, primary liability policies are usually provided as a combined single limit (CSL), which includes the limits for bodily injuries and property damages. They can also be provided as single limits, which separate coverages for bodily injury for one person, total bodily injury in an incident, and property damage.

Property Damage Liability

Property damage liability pays for the expenses for damages to another’s physical property during a covered incident. However, it does not cover expenses associated with damages to the tow truck itself, to the towing business’s other property, or to the towed vehicle. Property damage coverage is also required in all 50 states. Property damage liability is usually purchased in conjunction with bodily injury liability coverage.

Medical Payments Coverage

According to research from the National Institute for Occupational Safety and Health, towing workers and drivers are more than twice as likely to suffer from occupational injuries compared to the national average. Medical payments coverage, also known as MedPay, provides financial compensation for medical bills incurred by drivers and passengers who have been injured in a tow truck accident, regardless of fault. 

Medical payments coverage is important because primary liability insurance alone only covers injuries for other individuals involved in an accident in which the tow truck is at fault. Most insurance companies will offer medical payments coverage. Towing businesses should also consider purchasing workers’ compensation insurance, which covers lost wages when a worker is injured on the job.

Physical Damage Coverage

Since primary liability coverage does not cover expenses related to repairing a tow truck, towing businesses will want financial protection in the event that their vehicle is damaged in an accident. Physical damage coverage pays for the costs of damage to the policyholder’s own vehicles in the event of a collision. This also covers non-collision losses, such as theft or vandalism. 

Physical damage coverage can be purchased under one policy with most insurers, or as two separate policies known as collision coverage (damage from a crash) and comprehensive coverage (damage from theft or vandalism). While not required by law, physical damage coverage is definitely recommended and is also available through most insurance companies. 

Uninsured and Underinsured Motorist Coverage

If a tow truck gets into an accident caused by another driver, the at-fault driver may not have sufficient coverage to pay for the tow truck driver’s injuries and the truck’s property damage. Uninsured motorist coverage pays for expenses related to incidents when the motorist at fault is not insured. Similarly, underinsured motorist coverage pays for incidents in which the motorist at fault does not have a sufficient policy limit to cover the damages to the tow truck and its driver. The two are often bundled together, and most insurance companies will offer this coverage.

On-Hook Towing Coverage

On-hook towing coverage is one of the specialized coverages recommended for tow trucks. On-hook towing pays for the expenses associated with repairing or replacing a vehicle that incurs damages while it is being towed. This insurance can cover damages due to fire, collision, theft, or vandalism. However, this type of coverage only applies to vehicles that the business does not own. It also does not cover personal vehicles-for example, when a company employee is transporting their own vehicle for personal reasons.

Several states require on-hook towing coverage for towing businesses. Many insurance companies that provide commercial auto insurance policies will also offer on-hook towing coverage. Notably, this type of coverage is known as “garage keepers legal liability” coverage in Texas and Virginia. 

Motor Truck Cargo Coverage

Some insurance companies may distinguish hook and chain tow trucks from flatbed tow trucks. These insurance companies might also classify a vehicle that is being transported on a flatbed as “cargo.” In this case, on-hook towing coverage would not apply, and a towing company would need to carry motor truck cargo coverage, which covers damage to the freight or cargo of a truck while it is in transit. Typically, this coverage is for transporting and shipping companies, but in this case, the coverage would apply to the vehicle being carried on the flatbed truck and its contents.

Motor truck cargo coverage pays expenses for physical damages associated with incidents such as fire, collision, theft, or vandalism. It is sold as its own coverage and is available through any major auto insurance company. 

Garage Keepers Legal Liability

Garage keepers legal liability coverage is usually optional, although it is required for towing businesses in some states. Garage keepers legal liability protects against property damage to customers’ vehicles while the customers’ vehicle is being stored, serviced, or parked at a garage. 

The vehicle does not need to be stored in a literal “garage” in order to be eligible for this coverage. It also protects a tow truck business against claims related to slander or discrimination. Many of the large insurers that deal with commercial auto policies will have garage keepers legal liability as an option. In Texas and Virginia, this type of coverage is called “storage location coverage,” and the phrase “garage keepers general liability” refers to coverage of vehicles while they are being towed-known as “on-hook towing coverage” in all other states.

Garage Liability Coverage

Tow truck businesses and auto service companies that do business out of a garage or shop should consider garage liability coverage. This coverage is liability insurance for operations in the garage or shop. Where garage keepers legal liability provides coverage of vehicles stored in the garage, garage liability coverage is coverage for bodily injury or damage to property of the business. It does not cover damages to customer property or vehicles that have been towed. It does provide liability protection if a customer is unintentionally injured within the garage, or if company property is damaged by fire, theft, or vandalism.

Wrongful Repossession Coverage

Tow trucks are often hired during the repossession process, which occurs when a car owner fails to pay their auto loan, and the lender wants to take the vehicle back. Wrongful repossession insurance (repo insurance) protects towing businesses that accidentally repossess a different car than they were supposed to, or that repossess a car even if the car owner has caught up on their auto payments.

Wrongful repossession can lead to lawsuits or even violent altercations with an angry victim, and repo insurance will cover expenses related to these incidents. Repo coverage is not required in any state, but should be part of the overall tow truck insurance policy if the towing company does repo. Repo coverage tends to be very expensive, but the price scales based on what percentage of a company’s business involves repossessions. This is also a highly-specialized coverage, and many insurers do not offer it. 

What Doesn’t Tow Truck Insurance Cover?

Based on the above, it is clear that not all incidents are covered under each individual type of coverage. Some policies like bodily injury liability coverage only cover third parties but not the tow truck driver, while others like garage keepers legal liability coverage only apply when a vehicle is in a facility or storage area, not on the road. That’s why it’s important to purchase a series of policies to have the full range of coverage possible-for the driver, the business, the business’s vehicles, customers, third-party individuals, and third-party property-both on the road and in the garage.

Even with the broadest possible coverage, there are a few things that will never be included. Tow truck insurance policies will list exclusions, which are incidents, scenarios, or certain types of cargo that are not covered. Some common types of exclusions across the board are:

Intentional Damages

Damages or injuries resulting from intentional harm to another person or property will not be covered under a tow truck insurance policy. In fact, causing intentional harm in order to collect reimbursement from the insurance company is insurance fraud, which carries financial and criminal penalties.

Damages Exceeding Policy Limits

Every policy will have a maximum limit that the insurance company will pay toward claims. Any additional damages beyond the coverage limit will not be covered. To extend coverage limits, tow truck businesses can opt for an excess liability (or commercial umbrella) policy.

Certain Types of Cargo

Even with coverages like on-hook towing and motor truck cargo, some items or property are excluded from policies. These include money, jewelry, alcohol, tobacco, pharmaceutical drugs, contraband, and explosives. Hazmat insurance is available for tow truck companies that must handle hazardous materials.

How Is the Policy Structured?

Every insurance policy will be accompanied by a policy agreement, which is typically broken into four sections: the declarations page, the insurance agreement, the conditions, and the exclusions. The bulk of the information about the coverage is detailed in the declarations page, but it’s important to read the entire document before signing on the dotted line.

Despite its name, the declarations “page” is not necessarily one page. In fact, it can be several pages depending on how many insured parties there are, and how many coverages are included in the policy. The first part of the declarations page lists basic information such as the name of the policyholder, the business address, the policy number, and the dates that the policy will be in effect. It will also list the names of all the drivers and vehicles insured under the policy. 

The declarations page must also include a “schedule of coverages,” which details each type of coverage (such as liability, motor truck cargo, and on-hook towing), the vehicles that are included in each type of coverage, the policy limits, the deductible, and the premium. If there are any hired or non-owned vehicles covered under the policy, these will be included on the declarations page, too. Any discounts that have been applied to the policy will be listed at the bottom of the declarations page.

The second part explains the insurance agreement, which outlines the responsibilities of the insurer and the policyholder. This is also the section that specifically explains what constitutes a “covered” loss and reiterates the insurer’s commitment to providing coverage. 

The third part outlines the conditions. This section lays out the rules and procedures a policyholder must follow in order to receive coverage. The conditions will usually include information about the process for filing a claim, including required documentation and the time frame in which the claim must be submitted. A breach of the conditions could result in a claim being denied. This section will also describe the terms that must be followed if either the policyholder or insurer wishes to cancel the policy.

The final section lists the exclusions-events or property that are explicitly not covered by the agreement. As previously mentioned, these might include intentional damage, certain types of cargo, or damages exceeding policy limits. 

Allstate provides a step-by-step breakdown of how to read the declarations page for a commercial auto insurance policy. As a subset of commercial auto insurance, tow truck insurance will follow the same type of format, but include additional types of coverage like on-hook towing and garage keepers. Business owners can also request a sample tow truck policy from an insurance agent.

Requirements for Business Owners and Drivers

Tow truck businesses in the U.S. are required to have insurance. Since tow trucks are categorized as commercial trucks, they are subject to liability coverage minimums listed under Title 49, Section 387 of the United States Code of Federal Regulations. Liability coverage minimums are often expressed as a combined single limit (CSL), which includes both bodily injury and property damages. They can also be broken out separately as “single limits,” which describe the individual amounts of coverage required for bodily injuries or death of one person, bodily injuries or death of multiple injured persons in an incident, and property damage involved in an incident.

The federal government imposes insurance minimums on tow trucks that engage in interstate or foreign commerce, and these may differ from state-level requirements. At the federal level, the required liability coverage for a commercial truck driver is based on the truck’s weight and cargo, including $300,000 CSL for vehicles under 10,001 pounds, $750,000 CSL for vehicles over 10,001 pounds, and $5,000,000 CSL for vehicles that transport hazardous materials. 

Trucking businesses that travel or do business across state lines must also submit certain filings to the Federal Motor Carrier Safety Administration (FMCSA). Interstate truckers will need to submit a BMC-91 filing in order to prove sufficient liability insurance, a BMC-34 endorsement if they are required to have cargo insurance, and a MCS-90 endorsement attached to liability insurance and cargo liability insurance policies. 

In addition, most tow truck drivers will need a Commercial Driver’s License (CDL). According to the Federal Motor Carrier Safety Administration, tow truck drivers engaged in interstate commerce must have a CDL if the tow truck and its towed vehicle meet a certain weight threshold. For example, the driver must have a Group A CDL if the Gross Combination Weight Rating (GCWR) of the tow truck and the towed vehicle is 26,001 pounds or more, and the towed vehicle alone exceeds 10,000 pounds Gross Vehicle Weight Rating (GVWR). A driver would need a Group B CDL if the GVWR of the tow truck alone is 26,001 pounds or more, and the truck is either driven without a towed vehicle or with a vehicle less than 10,000 pounds GVWR. A Group C CDL is required if the tow truck is towing a vehicle that is used to transport hazardous materials.

State laws also vary significantly with different filing requirements and minimums for required insurance coverage. For more information about these requirements, see the complete summary of tow truck insurance requirements by state at the bottom of this page.

Besides federal, state, and local laws, a towing company that does towing work for certain companies or auto clubs, like AAA, may also be required to carry various coverage, like on-hook towing or garage keepers legal liability coverage.

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Tow Truck Insurance Cost

The “cost” of tow truck insurance is defined as the amount a business owner pays out-of-pocket for monthly premiums. Not surprisingly, policies with higher coverage limits tend to have more expensive monthly premiums. Tow truck insurance rates depend on many factors, such as the services offered by the business, the type of tow truck, the deductible, and the location. 

How Much Does Tow Truck Insurance Cost?

Tow truck insurance policies typically cost between $4,000 and $15,000 per year per vehicle, depending on the type of coverage required and the insurance limits. Other factors that affect tow truck insurance rates include driver safety, services offered, and how many trucks are covered under the policy.

Tow truck insurance is expensive for several reasons. One major reason is the increased risk of being hit by other cars on the road, since tow trucks are usually transporting other vehicles. Another risk factor is that towing services are more often needed during difficult weather and conditions. For example, a car might get into an accident during a snowstorm, and the tow truck would need to transport it to the garage while weathering the same storm. There are also injury risks that stem from winching and loading wrecked vehicles for towing. In addition, drivers who work in the impound or repossession industry might have a higher risk of confrontations with vehicle owners. All of these factors make insuring tow trucks more expensive than insuring many other types of vehicles.

Average Cost of Tow Truck Insurance Coverage

Tow truck businesses vary significantly, which makes it difficult to provide an average cost. According to Progressive, the national average monthly cost per vehicle for tow truck insurance (primary liability and physical damage) for their customers in 2019 was $464 ($5,568 per year). However, each individual type of coverage comes with its own range of costs, which affects how much a policyholder would pay in total. The table below shows some of the price ranges of the different coverage components of a tow truck policy.

Coverage	Annual Cost*
Liability (Bodily Injury + Property Damage)	$5,000 – $7,000
Physical Damage	$1,000 – $3,000
On-Hook Towing (Bundled with Liability Insurance)	$4,200 – $9,600
Garage Keepers Legal Liability	$1,000 – $1,300
Wrongful Repossession (Bundled with Liability Insurance)	$10,000 (assuming 25% repo work)

*rates apply to a tow trucking business with a single truck

Factors That Affect the Cost of a Policy

Some factors that determine the cost of a tow truck insurance policy are within a business’s control, while others are due to the nature of the industry. Here are some of the major factors that affect the cost of coverage:

Policyholder Profile

Is the policyholder a business with multiple vehicles and covered drivers, or an individual with a single truck? The size of the business will greatly affect the structure of the policy and its cost. Businesses insuring a greater number of tow trucks will have to pay more for insurance overall but should also pay less per truck for coverage. Another important factor in the policyholder’s profile is how long the company has been in operation. Newer companies (less than two years old) can be considered higher risk and will therefore incur higher costs. 

Driver Qualifications

As with personal auto insurance, tow truck employees’ driving history also influences tow truck insurance rates. Tow truck drivers who have more experience are less likely than newer drivers to get into accidents. At the same time, drivers who have a record of getting into accidents, speeding, or other reckless behavior will greatly increase the cost of insurance. When hiring drivers, it’s important to pay attention to their Motor Vehicle Reports (MVR) and continue to invest in safety training in order to keep premiums low. 

Types of Insured Trucks

Tow trucks come in many different sizes and models, including single axle, medium and/or heavy-duty dual/triple axle, underlift wreckers, and rollback carriers. The rule of thumb for insurance is the larger the truck, the higher the premium. The age of the trucks can also impact insurance, with newer vehicles incurring a higher cost because they would be more expensive to replace. 

Services Offered

The type of services a towing company offers, such as roadside assistance, auto-repair, repossession, salvage, impound, or rotation, will affect the insurance required. This will in turn affect the cost. Repossession is one of the most expensive and hardest services to find coverage for, since not all insurers will provide wrongful repossession insurance due to the high risk of this service. In fact, most major insurance companies don’t offer this coverage at all, and tow trucking companies should seek local insurers or companies like Prime Insurance Company or American Transportation Insurance Group for this type of insurance. A tow truck company can still get their primary coverages through a major provider, like Progressive or Liberty Mutual, and purchase additional policies for wrongful repossession from a company who offers it.

Vehicles Towed

Another factor is the types of vehicles towed by the company. This could refer to new or used cars, disabled cars, salvage materials, or heavier vehicles like motor homes & RVs, boats, trailers, or heavy equipment. The larger and heavier the towed vehicle, the higher the insurance cost.

Claim/Loss History

Insurers will also review the company’s loss-run history, which is a record of all claims filed on the insurance policy, up to the past three to five years. The more claims on the policy, the higher the insurance cost will be. Even a history of a lot of minor claims can result in an insurer increasing the cost of coverage, or denying it altogether.

Safety Measures and Programs

Towing companies that have implemented safety programs, such as frequent vehicle inspections, GPS tracking, and driver training, could be eligible for lower insurance rates. This is already a best business practice, but it can also pay off when it comes to purchasing insurance.

Driving Radius

Insurance rates will be higher for drivers who travel long distances, across states, or across country borders, compared to drivers who only travel locally. Long-distance drivers will need higher liability insurance minimums to meet federal requirements for interstate commerce, and will therefore incur a higher cost. 

Discounts

Insurance companies offer a variety of discounts for tow truck operators, usually based on driving history, safety programs, and years of company experience. For example, tow truck operators who have had a Commercial Driver’s License (CDL) for at least two years might be eligible for discounted liability coverage. At Progressive, tow truck companies that have operated their business for more than three years can receive a Business Experience discount, too.

Finding Cheap Tow Truck Insurance

Tow truck operators will want to strike the right balance between ensuring sufficient coverage and making a cost-effective decision. Aside from taking advantage of specific discounts offered through insurance companies, there are plenty of ways for tow truck companies and drivers to position themselves for the most savings. Most of these methods involve improving driver safety or choosing a policy with less coverage. 

Similar to personal auto insurance, driver safety is one of the most influential factors in the overall cost of tow truck insurance. Tow truck businesses should pay careful attention to driving records during the hiring process to check for previous accidents or tickets, which would result in higher insurance costs. For current drivers, invest in frequent driver training and pre-trip vehicle inspections as part of the company’s commitment to safety. Business owners may also consider installing GPS devices on the tow trucks to monitor driver speed and instating a policy against distracted driving and cell phone use while behind the wheel.

Towing businesses can also explore different payment options to save money. Depending on the insurer, a “pay-up-front” option may lead to paying less overall. At Progressive, for example, customers can save up to 15% if they pay their annual premium upfront. 

Since more coverage correlates to higher premiums, business owners should only purchase the necessary coverage without overdoing it. Tow truck operators that have only a few trucks and only offer basic services (i.e. no repossessions) might benefit from sticking with the minimum coverage limits required by law. 

Furthermore, it’s important to get price quotes from different insurers in order to accurately compare costs. For businesses with more specialized needs, such as insurance to cover wrongful repossession, the field of potential insurers might be narrow. However, for businesses that only require basic coverages, there are far more providers to compare prices and choose from.

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Finding the Best Tow Truck Insurance Provider

There are typically two paths to take when comparing tow truck insurance companies: hire an insurance broker or conduct research online. There are benefits and drawbacks to both. But either way, it’s important to be fully informed about coverage needs and different insurance options before purchasing a policy.

Where to Buy: Broker vs. Online

An insurance broker sells policies from multiple insurers, rather than working for a single insurer. This means that they can match coverage to business needs very well, although this benefit comes with a higher cost compared to an individual agent or buying a policy online. For tow truck businesses in particular, it can be harder to find more specialized coverages such as repo insurance, and enlisting the help of a broker can save a lot of time sourcing insurance companies. However, brokers are limited to the companies that they have relationships with, so business owners might be missing out on some other insurance options. 

Another option is for business owners to conduct their own research and purchase a policy online. Buying online can take some extra effort, but buyers become educated and can find the best coverage at the best rate and know the business is protected. It helps to read a guide (like this one) to understand what coverage is available and applicable. From there, narrow down a list of companies that meet the business’s needs. Most companies will provide tow truck insurance quotes online, with the option to follow up with agents from the company. Speaking with insurance agents over the phone also helps to gauge customer service, an important criterion for a long-term partnership. After conducting the necessary research and creating a short list of companies, evaluate companies on the following factors:

Comparing Tow Truck Insurance Providers

Coverage Options

Coverage options will vary from company to company. For example, some coverages might be bundled together (such as uninsured and underinsured motorist insurance) at some insurers, but remain separate at others. While most insurance companies that provide commercial auto insurance will have coverage options for primary liability, uninsured and underinsured motorist, physical damage, and medical payments, not all of them will offer more specialized coverage for tow trucks, such as on-hook towing, garage keepers, or repo. Other companies have specialty options for tow truck drivers and companies. 

Not all insurers have coverage options in every state, so make sure the locations match where the towing company does business. Other differences between insurers might include policy limits, so towing businesses with a large fleet of trucks may wish to go with a large insurer with higher limits. 

Company Reputation

Company reputation, especially in the form of customer satisfaction, speaks volumes about how much an insurer can be trusted to follow through on their commitments to the insured. A few of the best online resources to learn about company reputation include J.D. Power and the Better Business Bureau (BBB). J.D. Power aggregates customer ratings from insurance companies to provide a snapshot of the company’s products, business practices, and customer satisfaction. The Better Business Bureau is a website for customers to share their reviews and complaints about companies, while also providing those companies a chance to listen to their customers and resolve issues. J.D. Power and the Better Business Bureau (BBB) offer a snapshot about what current customers are saying and how insurers compare to each other.

Another indication of a good company reputation is the age of the company. While there’s nothing necessarily wrong with newer insurers, companies that have been around longer are likely to have a more established infrastructure in place for answering questions, handling claims, and resolving customer complaints. More established companies might also have more insurance offerings or options for higher policy limits.

If the insurance company offers many different types of insurance (such as auto, home, and life), learn how many auto premiums they’ve written, as well as the total premiums written. This information is often available on the insurer’s website, as well as industry websites like the Insurance Information Institute. 

Financial Strength

Tow truck operators purchase insurance in order to cover expenses for a variety of incidents that would result in unexpected, high out-of-pocket costs. That’s why it’s important to have an insurer with a strong financial foundation to ensure that it will be able to cover any claims under the policy. 

If the insurer is a public company, its financial documents will be publicly available and can be used to assess the financial strength of the company. Using the income statement and balance sheet, anyone can see a company’s assets and cash flow and compare them to the liabilities of the company to get a sense of financial health. Another simple way to assess the financial strength of public companies is to find their market capitalization, or the total value of all the company’s shares of stock. Typically, the market capitalization of a company is a broad measure of investor confidence in a company’s ability to continue operating profitably. 

Not all insurers are public companies, however, so it can be harder to determine their financial strength. One solution is to review ratings from the three major credit rating agencies: AM Best, Moody’s, and S&P. Each uses a different rating system to evaluate the financial stability of a company. Companies that score high marks across all three agencies are likely to be in a good financial position. 

Cost

Some companies, like Progressive, offer transparent pricing information on their website. However, most companies will require customers to get a quote in order to understand what the total price would be. The best practice is to request a tow truck insurance quote from a short list of companies, and then compare the costs.

Finding Insurance for Repossession Towing

Most of the major insurance companies, even those that provide coverage for towing businesses, do not offer wrongful repossession coverage. This makes it difficult for towing businesses who provide repossession services to find all the coverage they need to operate their business. 

Below is a list of the top tow truck insurance companies that also provide coverage for wrongful repossession. Because it is possible to purchase policies from multiple providers, repossession and tow trucking companies should decide whether they want to purchase all of their coverage through these insurers or just the wrongful repossession policy. The companies listed below each offer all of the coverage a tow truck company would need, though they are lesser known and much smaller than the major insurers. 

• Prime Insurance Company
• American Transportation Insurance Group (ATIG)

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Best Tow Truck Insurance Companies

1. Progressive Tow Truck Insurance (Best Overall)

Founded in 1937, Progressive is headquartered in Mayfield, Ohio, and operates in all 50 states. Progressive is the third-largest auto insurance company in the U.S. 

Coverage Options

Progressive offers a wide array of policies for tow truck businesses, such as primary liability, physical damage, motor truck cargo, on-hook towing, garage keepers legal liability, medical payments, and uninsured motorist coverage. Progressive’s insurance agents can provide a customized solution based on business needs. 

Company Reputation

Progressive is well-regarded for not only its breadth of policies, but also for its customer satisfaction. Progressive has an A+ rating with the Better Business Bureau. However, in a recent J.D. Power auto insurance study, Progressive scored below average, but still higher than many of the industry’s largest insurers.

Financial Strength

All three credit agencies have awarded Progressive with high ratings for its financial strength. AM Best grades Progressive’s financial health with a highly respectable A+ (Superior) rating, while Moody’s rates Progressive with an Aa and S&P gives Progressive an AA. Since Progressive is a publicly traded company, its financial statements are available for public review.

Cost

According to Progressive’s website, the national average monthly cost for tow truck insurance in 2019 was $464 per vehicle (primary liability and physical damage coverage, with clean driving records). However, tow truck operators should request a quote over the phone or online to see the cost tailored to their situation.

Progressive also offers many discount programs for its commercial customers, including a Business Experience Discount and a Commercial Driver’s License (CDL) Discount. Towing companies that choose to enroll in Progressive’s Smart Haul® Program, which uses an electronic logging device (ELD) to track driving data, could be eligible for additional savings.

2. Liberty Mutual Tow Truck Insurance (Runner-Up)

Liberty Mutual is a Fortune 500 company that offers a variety of personal and business insurance policies, including commercial auto insurance. Liberty Mutual was founded in 1912 and has offered auto insurance policies since 1918.

Coverage Options

Specific coverage options vary by state, so it’s worth reaching out to an agent to learn what’s available in each location. In 2014, Liberty Mutual also launched its Trinity Towing Program in conjunction with Trinity Transportation Services. This program, which offers more specialized coverage such as on-hook towing and garage keepers coverage, is available in 43 states (the excluded states are Illinois, Indiana, Massachusetts, Michigan, New Jersey, Ohio and Tennessee).

Company Reputation

Among the companies reviewed in this guide, Liberty Mutual earned the highest customer satisfaction rating (860/1000) in J.D. Power’s 2022 U.S. Insurance Shopping Study. Liberty Mutual also has an A+ rating with the BBB.

Financial Strength

Both AM Best and S&P give Liberty Mutual an A rating, and Moody’s gives an A2 rating. All of these indicate a stable financial outlook. Liberty Mutual is a public company, and its quarterly and annual financial documents are available on its website.

Cost

Liberty Mutual does not publish average costs for its insurance online. Instead, tow truck operators should request a quote from a Liberty Mutual agent over the phone or online. Liberty Mutual also offers Package or Multi-Policy Discounts, as well as a Paid-in-Full Discount.

3. Prime Insurance Company (Best for Repossession Towing)

Prime Insurance Company is a company that specializes in providing insurance solutions for higher-risk and specialty businesses, like towing businesses that engage in repossession. They aim to fill the gaps where the majority of insurance firms do not provide coverage. Prime is certainly smaller than the mainstream insurance providers, but they are not small-in 2019, Prime underwrote nearly $225 million in direct premiums. 

Coverage Options

Prime offers coverage for nearly everything a towing and repossession business might need, including garage keepers legal liability, on-hook towing, wrongful repossession, assault and battery, transportation of dangerous goods like firearms, and much more. Prime provides coverage in all 50 states, which is rare for a company that offers these types of policies. 

Company Reputation

Founded in 2006, Prime has a shorter track record than the major insurance companies, but they are still a quality company with a great reputation. Prime earns an A+ rating with the Better Business Bureau.

Financial Strength

Prime also boasts excellent financial strength, earning a financial strength rating of A (Excellent) from A.M. Best with a stable outlook in 2019. Also in 2019, they also earned a long-term issuer credit rating of ‘a’ with a stable outlook. According to A.M. Best, they have “an excellent ability to meet their ongoing insurance obligations.”

Cost

Towing and repossession businesses will need to get a quote from Prime to know exactly what their costs will be. However, Prime clearly states that they have no minimum premium requirements, and that they don’t blindly attribute risk without all the necessary information to make a proper assessment. So businesses can feel confident that they will get fair treatment from Prime and won’t be assumed to be risky merely because they operate in a generally risky industry.

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Additional Information

Tow Truck Insurance Requirements by State

Insurance laws for tow trucks also vary by state. Tow truck operators who only conduct business within a single state must adhere to coverage minimums required by state law, rather than federal law. In terms of insurance filings, most states will require a Form E, which verifies that the liability insurance meets the state’s required minimum. Some states will also require a Form H, which confirms that the business has sufficient cargo insurance.

Since tow trucks are a subcategory of commercial trucks, towing businesses must submit any state filings that are specific to tow trucks and large commercial vehicles. In California, all commercial trucks should have a Motor Carrier Permit and must also submit an MCP-65 filing to prove that they have sufficient liability insurance. In Florida, drivers operating vehicles with a gross vehicle weight greater than 26,000 pounds must submit a Florida Department of Motor Vehicles COI to prove sufficient coverage and minimum limits. In Indiana, commercial trucks must submit an SR50 filing to confirm at least the minimum required liability insurance.

Some states specifically require filings to guarantee sufficient liability coverage for tow trucks. For example, tow truck businesses must file Form 12 and Form 14 in Colorado, a HQMV-5 in Montana, and a Form T in Texas. Some states also segment their liability insurance requirements by weight. In New Jersey, tow trucks weighing less than 32,000 lbs require a minimum liability coverage of $750,000 CSL, while tow trucks weighing more than 32,000 lbs require a minimum liability coverage of $1,000,000 CSL. 

Even when specific filings for tow trucks aren’t necessary, some states have additional insurance requirements for these vehicles, beyond the primary liability coverage. In Illinois, tow truck operators must have garage keepers liability coverage of at least $500,000 CSL and on hook towing or garage keepers coverage of at least $25,000. Similarly, in Georgia, tow truck operators must also carry garage keepers legal liability coverage with a minimum amount of $50,000.

Below is a table of insurance filings and liability coverage minimums for every state, based on data collected by the Federal Motor Carrier Safety Administration. Local regulations at the city or county level may require higher insurance limits, specific coverage, or additional documentation filings, so it’s important to work with an insurance agent to make sure the business has adequate coverage. 

Based on FMCSA data, 17 states have specific liability coverage requirements that apply to tow trucks. For the rest, the table specifies the liability coverage needed for for-hire motor carriers that transport property. For states that require a Form H, the table also includes the cargo minimum for household goods carriers when that information specific to tow trucks is not available. 

Summary of Tow Truck Insurance Requirements by State

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References

• Better Business Bureau
• JD Power
• Insurance Information Institute
• Federal Motor Carrier Safety Administration
• Progressive
• Liberty Mutual
• Prime Insurance Company
• American Transportation Insurance Group
• Centers for Disease Control and Prevention
• A.M. Best Financial Strength Ratings
• A.M. Best Issuer Credit Ratings
• Moody’s Financial Strength Ratings
• S&P Global Financial Strength Ratings