If you own a business that offers towing services for a customer’s vehicle, you’ll need to purchase on-hook towing insurance from your commercial insurance provider. On-hook towing insurance, coupled with liability insurance, can protect you from a costly lawsuit in the event that your customer’s vehicle and the tow truck are involved in an accident. There are some restrictions and exclusions associated with this type of insurance policy, but it offers a multitude of benefits for businesses that use tow trucks as part of operations.
Here’s what you need to know about this special type of auto insurance policy:
How On-Hook Towing Insurance Works
Most commercial auto insurance providers only offer on-hook towing insurance for businesses that are defined as towing or service stations, and truck for hire companies that are responsible for transporting vehicles that the company does not own, but are insured. This type of insurance is governed by state laws and insurance company terms, so the amount of coverage, limitations and exclusions may vary depending on the company you work with and your location of business. In most cases, on-hook towing insurance will cover the costs of the following:
Repair or replacement of a vehicle that’s not owned by the business, and is damaged by a collision Repair or replacement of a vehicle that’s not owned by the business, and is stolen or vandalized in some way Repair or replacement of a vehicle that’s not owned by the business, and is damaged by an explosion, fire or other qualifying accident
When purchasing this type of insurance policy, you will need to choose a limit on your insurance and also select a deductible. Consider how much your business can realistically afford to pay up to the deductible in the event of an accident. You will be responsible for paying up to the cost of repair and replacement of damaged vehicle(s).
Limitations of On-Hook Towing Insurance
In addition to purchasing on-hook towing insurance, you will be required to buy liability insurance through your commercial insurance provider. All towing vehicles you use in your business must be under the same policy, and they also need to have the same limits. On-hook towing insurance cannot be purchased for certain types of vehicles, including:
Mobile homes that are towed by a vehicle For transporting personal use vehicles or business vehicles, such as cars, trucks and motorcycles on a tow truck For the transportation of race cars or boats that will be used for personal reasons For transporting antique cars for personal use
Sources:
Progressive Commercial – On Hook Towing Insurance
CarInsurance.com – What is On Hook Towing Insurance?
R.A. Storelee Insurance Agency – Towing Insurance