How much does tow truck insurance cost?

Tow truck businesses pay an average of $737 per month, or $8,839 per year, for commercial auto insurance.

This policy pays for legal fees, medical treatment, and repairs if your tow truck injures someone or damages their property in an accident. It can also cover vehicle theft, vandalism, and weather damage.

Most states require commercial auto insurance for vehicles owned by a business. For personal, rented, and leased vehicles used for work purposes, look to hired and non-owned auto insurance (HNOA) instead.

Keep in mind that you'll need additional coverage for customer vehicles in your care. That includes garage keepers insurance for customer vehicles stored or serviced by your business, and on-hook towing insurance for towed vehicles.

You should also consider non-trucking liability (NTL) insurance for coverage while you're driving a tow truck off duty, and bobtail insurance for any driving that occurs without a trailer, such as between loads.

Insurers look at several factors when determining commercial vehicle insurance rates. That includes the types of tow trucks you have and their value, how often they are driven, where they are driven, and the driving records of your tow truck operators.

The coverage options you choose, such as physical damage coverage or an additional insured endorsement, will also affect your premium.

If you're looking for cheap tow truck insurance, you can opt for lower limits or a higher deductible. You'll also save money if you focus on basic auto liability coverage instead of add-ons like comprehensive coverage, and only hire individuals with a clean driving record.

Towing businesses pay an average of $58 per month, or $700 annually, for general liability insurance.

Also called public liability insurance, general liability insurance covers common third-party lawsuits related to bodily injuries and property damage. For example, a customer could trip over a power cord in your office and sprain their back, or break their smartphone in the fall.

This policy also helps pay for legal fees if someone sues your business over an advertising injury, such as copyright infringement or defamation. For instance, a towing business could get sued for invasion of privacy for posting photos of a customer and their totaled vehicle on social media without their permission.

If your business has a garage or auto body shop, you should consider garage liability insurance. This policy extends the coverage of your general liability policy to the unique risks associated with a garage, which would otherwise be excluded.

Below is the average general liability policy for towing companies that buy from Insureon:

Insurance premium: $58 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $1,000

The per-occurrence limit is the maximum your insurance company will pay for a single covered incident, while the aggregate limit is the most the insurer will pay for all covered claims during the policy period, typically one year.

Insurance companies consider several factors when calculating the cost of your general liability policy. That includes the coverage limits and deductible you choose, your towing operations, your business income, and any additional insured endorsements.

You can save money on general liability coverage by buying it together with commercial property insurance in a business owner's policy (BOP). This cost-saving bundle protects against both common third-party lawsuits and damage to your office and business property.

For tow truck companies and other trucking businesses, the average cost of workers’ compensation insurance is $650 per month, or $7,795 annually.

Workers' compensation insurance covers medical bills related to employee injuries, such as a tow truck driver who injures their back while loading heavy equipment. It also provides disability benefits while an employee is disabled or temporarily unable to work.

Most workers' comp policies include employer's liability insurance to protect against lawsuits from injured workers, though they give up their right to sue once they accept benefits.

Businesses with employees typically must purchase workers' comp to comply with state laws and avoid penalties. For example, businesses in California and New York must carry workers' comp if they have one or more full-time or part-time employees. Florida businesses need coverage when they have four or more employees, and coverage is optional in Texas.

Since health insurance plans can deny claims for injuries related to your job, workers' comp coverage is also recommended for sole proprietors as a financial safety net and for peace of mind.

The cost of workers' comp depends on several factors, primarily the number of employees you have and their occupational risks. You can save money on workers' comp coverage by classifying your employees correctly and implementing a risk management plan to avoid work-related injuries and subsequent claims.