What is Tow Truck Insurance?

Tow trucks are often out in less-than-ideal circumstances. They answer emergency calls in bad weather, rescue broken-down vehicles from busy roadsides, and remove illegally parked cars from all kinds of neighborhoods. These situations put tow trucks at an increased risk of themselves being in an incident that requires an insurance claim. Tow truck insurance helps towing companies in New Jersey insure their vehicles from many of the potential perils they face.

Tow truck insurance is a type of commercial truck insurance that’s specifically for tow trucks. When underwriting these policies, insurers take into account how tow trucks are used and what insurance needs towing companies have.

What Coverages Does Towing Insurance Include?

In New Jersey, towing insurance policies must provide at least the state’s minimum coverage requirements. Most towing companies, however, elect to purchase more coverage than the government requires because they want to be better protected.

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One of the main coverages that almost every tow truck company gets is liability coverage. In a towing policy, this coverage usually protects against accidents that a driver causes, as well as damage they cause to customer’s vehicles that are being towed.

Other coverages that many companies choose to get include:

  • Physical Damage Coverage, which usually covers a tow truck for certain types of damage
  • Comprehensive Coverage, which typically covers other types of damage that a tow truck might sustain
  • Medical Payments Insurance, which might cover medical payments for drivers or passengers who are injured in an accident
  • Uninsured and Underinsured Motorist Coverage, which often provides protection against accidents caused by other drivers who don’t have enough insurance
  • On-Hook Towing Coverage, which may cover a vehicle while it’s being towed

Towing services that store some vehicles they tow may also need garage service coverage. This coverage often covers damage that other people’s vehicles sustain while they’re parked in a company’s garage or parking lot. Garage service coverage might be purchased as a stand-alone policy or as part of a more comprehensive towing package. 

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What Factors Influence Towing Insurance Premiums?

Insurers consider many factors when they’re calculating the premiums for a towing insurance policy. A few considerations that can affect a policy’s premiums include the:

  • Age and model of a tow truck being used
  • Driving records of drivers
  • Type of towing a truck will be used for
  • Area where a truck will be used
  • Coverages a business wants

What Businesses in New Jersey Need Tow Truck Insurance?

Most businesses and independent contractors in New Jersey that tow vehicles need a tow truck policy. This includes everything from a towing company in Trenton, NJ that has a fleet of tow trucks it operates around-the-clock, to a garage in Sussex, NJ that has a single tow truck it uses only occasionally. Any business that tows vehicles is exposed to the risks that come with towing and, therefore, ought to have coverage.

A few examples of specific businesses that may need towing insurance are:

  • Towing companies
  • Automotive garages that tow vehicles
  • Body shops that tow vehicles
  • Independent contractors that operate a tow truck
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Businesses and independent contractors that don’t at least purchase the state’s minimum required insurance won’t be able to legally tow vehicles on public roads, but this isn’t the only consequence that not carrying insurance can have. Towing services that don’t have enough liability coverage may not be able to get contracts with automotive shops, municipalities, or businesses that want to contract with a towing company in the area.

How Can Businesses Get a Tow Truck Policy?

Businesses and independent contractors that need tow truck insurance or haven’t reviewed their coverages recently should get in touch with an independent commercial insurance agent. An agent who is licensed in New Jersey will be able to make sure a business or contractor gets insurance that at least meets the state’s minimum requirements, and they can help decide what other coverages should be purchased.

Meet Your Industry Specialist

Greg Kroeger

Mr. Kroeger is a Partner at World Insurance Associates LLC, and joined the team from American Truck Insurance Exchange, which he co-founded in 2009. Greg has over 20 years of commercial insurance experience, including six years at HUB International, where he was First Vice President and ten years managing his own agencies.

Prior to HUB, Mr. Kroeger was the co-owner of C.S. Nenner, Inc., an independent agency with $30 million in premiums, specializing in transportation and warehousing coverage for trucking businesses.

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