If you are thinking about starting a towing company, there are several different things you will need to think about before you open for business.
What type of towing do you plan to do? Will it be all private passenger vehicles, or will you also tow commercial vehicles? Will you be available 24/7? Will you do any repo work? How many tow trucks will you own and how many drivers will be on staff? Where will you be towing the vehicles (will they be stored on your own property or will you be towing by contract to another location, such as an impound lot)? Will you provide Emergency Road Services? Will you perform any sales of salvaged or abandoned vehicles?
The answers to all these questions will provide the basis for rating your insurance policies and will ensure that your operations are fully covered for every eventuality.
Once you know what your operations will be, you will be able to determine exactly what coverages you will need to cover your business fully. Some recommended coverages are as follows:
- Commercial Auto Liability and Physical Damage
- This will cover your own tow trucks and other commercial vehicles against liability and physical damage incidents caused during the course of business.
- General Liability
- This will cover you for any injuries to clients or damage to the vehicle in the process of preparing it to be towed.
- Garagekeepers Liability
- This is going to provide coverage for damage to (or theft of) vehicles under your care, custody, or control. If a client vehicle is stored on your business’s lot and is damaged, this coverage will be the one to respond.
- On-Hook – Cargo
- This will provide coverage for damage to the client’s vehicle while in transit on or by your tow truck.
- Hired/Non-Owned Autos
- This covers any vehicles you might rent or borrow when necessary to your business operations.
- Dealer Plates
- This type of coverage is not as common with towing operations, but if you are going to be doing any type of sales of salvaged vehicles, it is necessary. This coverage protects the vehicle, the driver, and in some cases, third party claims in the event of an accident while test driving the vehicle.
- If you have your own office building and/or storage lot, property coverage is what you will need to cover any type of physical damage to your building or its appurtenant structures (fences, etc.).
- Excess Liability
- For business, we always recommend an excess policy just in case. You never know when a tragedy will occur, and it is always better to be safe than sorry.