Towing and Recovery Insurance 101
One of my favorite business types to insure is a Towing and Recovery company. Your average towing operation is going to be a family owned business with several members of the family involved. Towing operations often work around the clock. Whether you are stuck on the side of the road at 2 p.m. or 2 a.m. doesn’t matter much to the average tower. They will be there. And what do they get for rescuing stranded drivers? Often they have to deal with people whom are very stressed out and will likely show little to no appreciation for the fact that this tow driver has gotten himself out of bed at 2 a.m. and drove 20 miles to help a complete stranger. Tow truck drivers are often thought of as “rough” or “unprofessional." When a tow truck driver shows up to the scene in a Hollywood movie, you don’t think of him as the hero. Instead, you wonder if these poor teenagers stranded on the side of the road are going to make it home alive.
What I have found over the years in working with Towing and Recovery operations couldn’t be further from the stereotype. Your average towing and recovery company takes their job very seriously, and although they don’t wear a suit and tie for work, they hold professional values and ethics in the highest regard. Just like salesman, teachers, or any other professional you can think of that requires on-going training, towers are constantly in the process of training and improving their skills. Don’t believe me? Let’s see you pull a Semi Tractor-Trailer out of a 20 ft embankment on the side of busy highway without doing any more damage to the vehicle, the road, and the personnel at the sight of the accident.
When it comes to coverage, Towing and Recovery operations are defined by the Business Auto Policy. Tow trucks are not easy to insure. They are often of much higher value and assume a great deal more risk than most vehicles on the road. Every Towing and Recovery operation should have the following coverage:
1. On-Hook Coverage: This protects the vehicles that are being towed. Do you tow busses or semis? If so, then you will probably require higher limits. Do you tow on contract for any municipalities? If so, they may require a minimum amount of coverage.
2. Cargo Coverage: Do you haul items that are not vehicles? Items such as wood, steel, construction equipment and the alike require Cargo Coverage. This is one of the biggest oversights I see on Towing and Recovery policies. Towing operations are often hired by local contractors to move equipment. If a tow truck should roll over, loss a load, or embank while hauling such items, those items will not be covered by an On-Hook policy.
3. Garage Keepers Coverage: Is an impound lot or an auto repair shop a part of your operations? While vehicles are in your care, custody, and control, then you are responsible for those vehicles. What is the total value of the vehicles on your premise? If your business caught fire, how many clients could lose their vehicle? The amount of coverage will vary depending on the scope of your operations.
Other coverage to consider: Business Auto, Property, General Liability, Workers Compensation, Umbrella, Pollution.
Auto Repair and Auto Body Repair Coverages
Garage Keepers Insurance Coverage
The Garage Policy:
A Garage Policy was originally designed to insure the risks associated with businesses which sell, service, store, or park vehicles designed for on road use.
Types of Coverage Included In a Garage Policy:
The garage policy provides coverage for:
- Auto Liability
- Physical Damage
- Commercial General Liability
Since all three types of coverage are combined into one policy, it is called a Garage Keeper’s Insurance Policy, and includes:
- Garage Keeper’s Legal Liability
- Garage Liability (Automobile Portion)
- Garage Liability (Non Auto Portion)
How Garage Keeper’s Legal Liability Works:
This section covers the loss to a covered vehicle or equipment left in your care. When this insurance is on a ‘Legal Liability’ basis, claims will only be paid for the losses for which you are legally obligated to pay. An endorsement, known as a ‘direct coverage endorsement’ or ‘goodwill endorsement’ can be added to the policy, which would pay for all losses, even if your business is not legally obligated to pay.
The “Auto Portion” of Garage Liability :
Damage to Customer Vehicles
This section of the garage policy pays for physical damage which your business caused to a customer’s vehicle. The auto portion usually has a deductible, normally $500 per vehicle.
Damage to Non-Customer Vehicles
This section provides coverage in the event that someone in your business is involved in an accident, causing personal injury or property damage to someone else, while driving a customer’s vehicle. A $250 deductible is typical in this area.
The “Other Than Auto” Section of a Garage Policy:
This section of the Garage Policy would be similar to a Commercial General Liability Policy. This would provide insurance coverage for your business in the event a customer is injured on your business property.
Types of Risk our Garage Program Covers: Towing & Recovery with Impound Lot, Truck Repair, Auto Repair, Auto Body and Collision Repair, Auto Restoration, Small to Mid-sized Auto Dealers
