Because the towing industry is special, some of its insurance needs are, too. The following will give you an overview of some of the coverages and terminology. Remember, this is not a policy or an offer of coverage but a general overview.

Auto Liability

Auto liability provides coverage for your legal liability for "bodily injury or property damage" to others arising out of the operation of your wreckers and other owned vehicles on the policy. This includes damage to others caused by the vehicle in tow but not to the towed vehicle itself. (That's on-hook coverage, more on that later).

The limits of liability you need is determined by such things as what state you are located in, if you plan to cross state lines, etc. Federal law specifies that if you cross a state line you must carry $750,000 coverage and have a Form MCS-90 attached to your policy. We can help you to determine what limits are the minimum required for your operation. You would be surprised by how little additional cost there is to get higher limits.

Auto Physical Damage

Auto physical damage provides coverage for damage to your wrecker. "Collision" is obviously damage caused by a collision with another object. "Comprehensive" is damage caused by other than a collision. Examples would be vandalism, flood, theft, etc. Usually, you can't get one without the other. Each loss is subject to a deductible, the most common is $1,000 but sometimes lower ones are available.

The value of the coverage on your unit is set one of two ways depending on the insurance company used.

Stated amount: You state the amount at the beginning and the policy will pay for damages up to that amount but not to exceed the actual value of the vehicle. You don't want to over or understate the limit on the vehicle. Otherwise, you'll pay for coverage that's not there or get less than the unit was worth in a total loss. Your premium is based upon the value you set.

Actual Cash Value or ACV: This pays for the damage up to the actual value of the unit
at the time of loss.Your premium is based upon the units cost new and adjusted downward for older units.

Garage Liability and Garage Keepers Liability

These two coverages are often confused. I find the best way to keep them straight is that the garage liability is usually a high limit equal to your auto liability limit, while the garage keepers is lower and based upon the value of the vehicles in your custody. Another way is to think of 'keepers" as what you are keeping for your customers.

Garage liability provides coverage for liability arising out of your operations other than your owned autos. Some examples are:

• A customer slips and falls at your shop, lot or office.
• You changed a tire and the lug nuts came loose and caused injury or damage.
• You are jump starting a car and hook something up wrong. The battery explodes and burns your customer or some bystander.
  

In most cases, we can even "broaden" the coverage at a small additional premium to cover things like libel and slander.

Garage keepers liability provides "physical damage" (see "auto physical" damage above) coverage for autos in your custody other than on your wrecker or roll-back; normally at your storage lot but also elsewhere. For example, you have transferred a new car for a dealer and unloaded it at his lot. They say don't park it there, put it at our lot across the street. So rather than reload it, you hop in it to drive it there. Yup, in the process you clip a light pole and do $3,500 damage to that new Lexus, Lincoln, or Jaguar. This is what garage keepers is also for.

There are three forms of garage keepers coverage and will determine how and if a claim is paid.

1. "Legal" provides coverage for damage that your legally liable for, i.e. you were negligent.

2. "Direct Excess" provides "legal" coverage but also will pay for damages that were not your fault if there is no other coverage on the car.

3. "Direct Primary" provides that your policy pays for damage to the car regardless of fault even if there is other insurance on the car.

Most operators buy the "legal" coverage, not wanting to have their loss history charged for damages that they weren't responsible for.

On-Hook/Cargo Coverage

This is one coverage where there can be large gaps if your policy is not written correctly. If your policy is limited to "autos", there is no coverage for things like forklifts, boats, etc. If it says "vehicles", then what about a piece of machinery or and A/C compressor.

In either case, where is coverage for the contents of that "auto" or "vehicle"? . . . 999 time out of 1,000, there won't be any. If your policy is like that then you'll be paying for the $12,000 worth of wide-screen TVS in the Circuit City delivery truck that you turned over . . . or the $25,000 worth of food in the restaurant supply truck, etc., etc.

We have also seen policies that have an exclusion for damages caused by improper hook-up or if safety chains were not used or if the steering wheel wasn't tied correctly or if you were beyond the radius limit set out in the policy.

Most of the policies we offer do not contain these restrictions. We would only use them as last resort which means that the tow company didn't qualify for our preferred programs and coverages.

As for limits, that depends on your operation and the things your are hauling. We have provided limits of $1,000,000 and higher. Once again, you might be surprised at how little additional higher limits cost, like from $25,000 to $50,000; just ask us.

Uninsured Motorist Coverage

This provides coverage when you are struck by a motorist who has no liability coverage, or, in some states, doesn't have enough coverage to cover the damage or injuries caused.
 
This coverage varies from state to state. If you do not want this coverage you must reject it by signing a form provided by the insurance company.

About Us

We have been providing quality coverages to the towing and recovery industry for 25 years. We understand your needs, so let our staff customize coverages just for you.

Got a question? Give us a call, no obligation at 800.950.7911.