On Hook Towing Insurance

How your drivers impact your towing insurance premiums

Are Your Drivers Driving Up the Cost of Your Commercial Towing Insurance?

The risks involved in professionally operating a tow truck are much greater than the risks of operating a personal vehicle. For this reason, it should come as no surprise that premiums for your towing operation will be higher, simply due to the exposure.

+ Higher Limits

But did you know that the drivers you employ and their respective driving histories play a fundamental role in the underwriting process and in calculating your premium? Below, we’ll cover what you need to look for when hiring drivers that can rate up your On-Hook Tow Insurance premiums, or even prevent you from getting coverage.

Differences in Coverage for Cargo vs Garage Keepers Coverage

Motor Truck Cargo defined:

Motor truck cargo insurance provides legal liability coverage for truckers, whether common or contract, while they are transporting property of others. The policy protects the insured (trucker) and the covered property (cargo). In addition to paying for the cost of the lost or damaged cargo itself, some policies also pay costs to remove debris or pollutants caused by the debris.

Within the tow industry a common interchangeable term for Cargo Coverage is On Hook Coverage, but be very careful because these terms are not always so interchangeable when it comes to understanding the coverage’s. Some carriers define their On Hook policy form to read coverage for only motorized vehicles that are in tow and does not cover non motorized vehicles or commodities (Example: Generator). In this case, a tow operator that transports both motorized and non motorized vehicles

Garage Keepers coverage is an optional line offering protection to the towing business or garage business for loss to a customer’s auto left in the insured’s care, custody or control. The policy clarifies that by saying, “while the insured is attending, servicing, repairing, parking or storing it in your garage operations.”
There are two forms of Garage Keepers liability, one is Legal Liability the other is Direct or Primary. The legal Liability form restricts coverage, where the coverage is triggered only in the event that the insured was found negligent (legally liable) for a loss while it was in its care, custody or control. Direct Primary GarageKeepers liability provides coverage regardless of negligence or fault.
The importance of having both a Garage Keepers and Cargo policy in force is to eliminate possible gaps in coverage pending on where the cargo is in the transport cycle.

Do not confuse Garage Keepers Insurance with Garage Liability Insurance.

A garage liability policy is purchased by owners of a garage or body shop and it covers bodily injury or property damage caused by an accident arising out of garage operations. For those tow operations that also own a garage and perform service work on vehicles or roadside assistance they would need Garage Liability insurance as well.

Red Flags

Drivers with serious infractions on their MVRs within the last 36 months or beyond, can significantly drive up the cost of your insurance policy or disqualify you altogether. While the specific driver underwriting criteria of each insurance carrier vary, the following are the types of violations that will raise a giant red flag with you and your respective insurer:


Driving while license is suspended or revoked
Possession of controlled substances or open containers
Felonies involving a motor vehicle
Failure to report an accident or leaving the scene of an accident, regardless of damages
Passing a stopped school bus
Speeding in a school zone
Speeding 20 miles or more over the posted speed limit
Reckless or careless driving
(Failure to pay child support)

Besides these obvious infractions, most insurance companies will also consider the number of minor violations and at fault accidents, years of driving experience, and in some cases, specific tow truck operating experience that your drivers must have in order to be covered under your insurance policy. They may also want to know if any of your drivers have Commercial Drivers Licenses (CDL).
Drivers who are in possession of a CDL are considered a true asset to your business due to their training, and insurers look favorably on the number of commercially licensed drivers you hire. This in turn can have a positive effect on the cost of your insurance policy.
**Rule of the day: Using best in class hiring practices and ongoing driver training and safety practices will help reduce this exposure considerably.

Safeguarding your business

To ensure you’re not exposing yourself to unnecessary risks, make it a routine to obtain a copy of every potential employee’s motor vehicle report (MVR) before you hire them. This should be a standard best business practice for any type of towing operation, regardless of the type (salvage, recovery, impound, roadside assistance/motor clubs, repossessions, etc.). It is just as important to consistently keep a watchful on all hired drivers, and we strongly suggest that each driver provide their driver abstract during the employee annual review.

An easy way to see what’s on a potential hires MVR is by calling your insurer and asking them to run a report. To do this, you’ll need the person’s driver’s license number and date of birth (typically found on their job application). Depending on your state laws, the insurer may not be able to legally disclose the specific findings of the driving report, but inform you if the individual has a desirable or undesirable driving history.

Keep in mind that if you do opt to hire someone with a questionable driving history, your insurance carrier may decide to file a driver exclusion <image> form, prohibiting that individual from operating any company vehicles covered under your policy until which time specific infractions fall off the MVR. However, you must adhere to the exclusion. If you don’t, you’re putting your business and future insurability at risk.

Carefully screening employees and making well informed hiring decisions guarantees better insurance rates and greater long-term savings for your towing business.

Find Low Cost Tow Truck Insurance

Factors that influence the price:

The premium you’ll pay for your insurance will vary, because every tow business is different and each carrier has their own unique rating system. For example, an insurance company will utilize analytical data bases in weighting the different factors that determine both eligibility and final rates. The loss ratio and loss frequency are typically the two most heavily relied upon drivers when determining price and eligibility by all Insurance Companies, but many others factors come into play as well.Type of towing operations

Weight (GVW) and type of tow equipment.
Cost of tow equipment
Amount of On hook/Cargo Limits
Are fillings required?
The average monthly number of tows
Driver records & related commercial driving experience
Safer Report
Website Content
Limits of Liability
Radius of Operations
Number of employees
Total receipts
Business Location
Risk Management Practices

Factors that influence eligibility and price:

There are a several best practices that can give you the upper hand in controlling the spiraling cost of tow insurance, with the two most important categories being your hiring practices and ongoing training of all employees.

Hiring qualified drivers is paramount to the long term safety of your tow operations. It takes both time and patience but will pay large dividends over time. First and most important make sure to carefully screen all new hires. It is essential that you know the driving history of every employee prior to offering them a contract. Additionally having a written job application, conducting extensive background history, checking job references, drug testing, medical exam, and on the job training both in the field and classroom prior to driving alone.

Hiring experienced drivers can be advantageous. Regardless of driving experience having a superior on boarding training program both in house and outside certified training programs like Wreckmaster can make even less experienced drivers become equally attractive hires.

How to pick a good Agent

Finding an agent

So, how do you go about finding the right agent for your needs? Once you have a better understanding of your insurance needs, here are a few places to start:

Referrals from Family, Friends, Neighbors, Colleagues

In a recent NAIC survey, 79% of consumers questioned indicated they asked family and friends for insurance advice; 65% said they also asked colleagues and social acquaintances. When you ask around, find out why they like the agent. Is it the customer service? Is the agent friendly and knowledgeable? Did the company they represent do a particularly good job handling a claim? Have their rates for a particular coverage increased or decreased over the past three years? Does the agent review their policy annually to make sure they’re getting the best coverage at the best price?


Search for the line of coverage on the internet. The largest companies writing that line will typically be the first listings you find. Many companies also post lists of its licensed agents online.

Trade Associations or Other Business Owners

Small business owners can talk with local trade associations or other similar business owners, which might have related insurance needs.

Selecting an Agent

Whether you’re looking for your first agent or thinking about switching agents or companies, it’s a good idea to have several to choose from. When evaluating your list, consider these things:


Have conversations with prospective agents. Explain your situation and ask for a quote. Simply asking does not mean you have to work with them. This is a chance for you to get a feel for how they work and if you’re comfortable with them.


Many agents and brokers will have letters behind their names on their business cards. These represent designations or credentials they have earned from various insurance groups or associations. Ask them what these letters mean and what they had to accomplish to earn the credential.


Make sure the agent and the company they are writing your policy with are licensed in your state. You can check company licensing information on the NAIC Consumer Information Source (CIS) web page or by calling your state insurance department. Find their contact details here.


While you’re checking whether the agent and the company are licensed, also check to see if they’ve had complaints filed against them. For the company, you can check the NAIC’s CIS or call your state insurance department. The insurance department can also tell you if any complaints have been filed against the agent. You also might check with the Better Business Bureau to see if any consumers have filed complaints – or compliments – about the agents you’re considering.

Services Provided

Traditional agents look at their job as providing risk placement services (getting best coverage for best price) and the ongoing servicing of their clients insurance policy (ID cards, Issuing Certificate of Insurances, Provide premium financing, policy review…) as to the extent of their services. For commercial business owners you want to know what risk management services they can provide to help better manage the safety of their business operations and to avoid any audits conducted by State or Federal Authorities.


When you’re applying for a job, you provide references, so don’t be afraid to ask a prospective agent for the same.

Ask Questions

What are your areas of expertise?
What is your reach? Are you local? Statewide? Nationwide?
What is your experience in my industry? How many years have you been writing this type of insurance?
Do you have any client references?
How long have you been in business?
How many companies do you represent?

When in Doubt: If would like more guidance on how to evaluate a potential agent, contact your state insurance department.

Find out how many reputable Insurance carriers they have direct appointments or direct access– In today’s tow market, it is essential that the agent you choose has several options to place your tow insurance. Not always possible, but find out the name of Insurance Companies your agent has access

Visit Their Websites.
Websites are full of information. Read about the history of the agency, the staff’s bios, their customer testimonials. See if their website provides insurance information and easy access to price quotes, either online or via telephone. Websites can give you a feel for the personality of the agency, what they think is important, and the type of customer service they provide.

Look for Credentials.
A knowledgeable independent agent can provide the advice you need when deciding what coverage and limits you need to protect your family and you. Look for independent agents who have letters next their name on their business card. These represent professional designations, such as Certified Insurance Counselor (CIC), Chartered Property and Casualty Underwriter (CPCU), Associate in Risk Management (ARM). To maintain these credentials, independent agents must take continuing education classes.

How is your Commercial Premium Determined?

Factors that carriers will use to determine premium/rates:

Classification of business class (Tow operation, garage, restaurant)
Number of employees

What factors does a carrier use to decide my Premium?

Length of time in business
Operations (Tow for hire, Illegal parks, Repo’s, Transport of cars)
Loss History
Coverage’s and limits

Steps to get control of carrier giving you best premium

Risk Management Services (safety meetings, DOT and OSHA complaint…)
Reputable Agent
Maintain favorable ratio’s for loss history and loss frequency
Shop with multiple carriers through multiple agencies

How to make sure your getting the right coverage’s for the best price

Proper risk analysis of your business exposures
Compare quotes from competing carriers
Seek advice from multiple agents

How to compare quotes

Steps to best practices for risk analysis
Comprehensive Survey of Hazards
Coverage’s for Tow Operations
List of available coverage’s and definitions
How to determine limits on policy

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