Tow Truck Insurance Cost Guide

Does Insurance Cover Tow Truck?

At minimum, you need auto liability coverage, as well as general liability insurance, since you are running a business and want to protect your personal assets. There are different options, add-ons and umbrella policies one can choose to make sure that you minimize financial loss risk in case of accident and damage to the towed vehicle, your tow vehicle, yourself, others or property, should you be in an accident.

Tow Truck Insurance Cost Brief

What Is The Coverage Of Tow Truck Insurance?

As mentioned above,” [t]ow truck insurance was designed to cover the wide breadth of business risks that towing operations face every day. A towing company is a business that offers services and roadside repair or assistance for disabled vehicles. This may include repossessions, police or state authority work, and roadside assistance.” (Source:

There are several components to the tow truck insurance plan, each covering a different risk aspect of the business when it comes to financial liability in case of accident(s). Some of these options include primary liability, physical damage, workers compensation, uninsured/underinsured motorist etc.

A 2020 average monthly cost quoted by Progressive was $448, which included liability insurance, medical payments insurance, physical damage coverage and uninsured motorist coverage. Some add-ons are: garagekeepers general liability insurance, on-hook towing insurance and general liability insurance.

These are all great to have, especially if you are serious about protecting your business and your assets. However, an insurance agent will be able to provide a detailed and accurate quote based on specific needs, one’s situation and history etc.

How Much Is A Tow Truck Insurance?

Generally, tow truck insurance can run anywhere from $5,000-14,000/year per tow vehicle, which boils down to $417-$1,167/month. This depends largely on the value of the vehicle, the state one resides and operates in, the driver’s history (and claims), the deductible amount, as well as amount of coverage.

There are several mainstream insurance carriers who offer this type of insurance, such as Progressive, Insureon, The Horton Group and Duramerica. With the increase of e-commerce, there are many new insurance brokerages that are online only who can offer competitive rates and coverage due to zero overhead, passing on the savings to the customer.

While it is challenging to specify different premiums per policy and additional riders, below are some ranges to give you an idea how much each coverage costs:

  • “Rural business, minimum limits of coverage
  • $1,000/year (One Truck)
  • Metro (city-based) business, recommended limits of coverage
  • $6,000/year (One Truck)
  • A business with tickets and accidents
  • $20,000/year (One Truck)
  • Over 25% repossessions
  • $10,000/year (One Truck)
  • Incidental towing (Towing as a part of another business, like an auto body shop)
  • $4,000/year (One Truck)”


How Is Tow Truck Insurance Cost Calculated?

The tow truck insurance premium is calculated based on several different factors:

  • Location (place of business and tow truck storage)-higher in cities and dense population areas
  • Type of tow truck-newer and more costly unit, as well as high-risk trucks and flatbeds will be more expensive
  • Primary use-accident towing will be more expensive than hauling/transport only
  • Number of tow trucks-the bigger the fleet, the higher the cost
  • Years in business-an established business with a good track record will cost less over time
  • Driver records-if you employ drivers, their age, experience and driving record matters as much as yours
  • Loss-runs-this determines how much of a risk you are to the insurance company. The more loss-runs, the higher the premium.

Why Is Tow Truck Insurance Expensive?

There are several factors that contribute to the high cost of tow truck insurance:

  1. Overall costs are going up
  2. Expensive tow truck repairs and maintenance
  3. Higher cost in densely populated areas
  4. Higher levels of crimes, incl. vandalism and theft.

All these affect the claims paid out and, in turn, the insurance companies pass on their expenses by raising their rates to keep their financial risk at bay and their profits worthwhile.

Tow Truck Insurance Cost Brief

How Much Tow Truck Insurance Do You Need?

“In 2020, the national average monthly cost for basic tow truck insurance was $450, or approximately $4,500 to $5,000 per year for a single tow truck used for basic roadside and recovery towing. A general liability policy is also required by state law; the average price for a standard general liability policy for a small tow truck business with minimum coverage averages at $97 to $159 per month.” (Source:

So at minimum, one needs general liability insurance to run a business and commercial truck insurance to cover the tow vehicle. THis is to protect you as business owner and the customers, as well.

Ways To Save Money On Tow Truck Insurance

There are ways one can reduce the cost of tow truck insurance, and it’s pretty much in line with being a good and responsible vehicle owner and business owner:

  • Driving logs: displays meticulousness and care
  • Maintenance: especially keeping records of regular thorough maintenance shows good stewardship of the tow vehicle
  • Good driving record: shows that one is a defensive driver
  • Good credit: demonstrates responsibility
  • Documenting things properly: if you end up in an accident, make sure you take detailed photos and document things well to help the insurance company out.

Overall, being organized and showing great care for your tow vehicle and business is the best way to demonstrate responsibility that helps the insurance company see you as a lower-risk insured. This, in turn, will help reduce your premiums.


What is not covered in Tow truck insurance?

It seems that everything you need can be covered by tow truck insurance: from covering the car in tow to garage insurance to liability insurance. Tow truck insurance policy can be tailored to make sure that your business is fully covered.

Do you need insurance before you can start a tow truck business?

Yes, you will need to have coverage before you start operating your business legally. The minimum insurance you will need is General Commercial Insurance, On-Hook Insurance and Cargo Insurance.

How much is tow truck insurance in Florida?

The tow insurance in Florida can be anywhere from $10,000-$18,000 per power unit per year.

What insurance does a tow truck driver need?

At a minimum, one will need auto liability insurance. However, to protect yourself from financial ruin, these are the insurance coverage options to consider: bodily injury, property damage, medical payments insurance, uninsured/underinsured motorist coverage, as well as garagekeepers legal liability coverage and on-hook towing insurance.



Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

settings gear package bag