There’s a lot to consider when you get tow truck insurance, and it can get a little overwhelming. When you’re getting insurance in a high-risk industry like towing, it’s crucial that you get the right coverage to protect your business, your drivers, and your trucks. Check out the following common tow truck insurance mistakes so you know what to look out for when you’re buying tow truck insurance.
1. Not asking about discounts.
Discounts are great. They mean that you get to pay less for your insurance just by being you. It might be worth taking a second to ask the agent assisting you with your insurance if you qualify for any discounts. Keep in mind that every carrier is different and they all offer different discounts for different amounts.
2. Choosing a deductible that is too low or too high.
Your tow truck insurance deductible is the amount that you agree to pay if you have a claim. You have your portion of the loss and the insurance company takes care of the rest (up to your policy’s limit.) For example, let’s say you have a $1,000 deductible. Then you have an $8,000 claim. You would pay $1,000 and the insurance company would pay $7,000.
Setting a higher deductible ($1,500 instead of $1,000, for example) can help you get lower premiums because you’re less likely to file a small claim. But you also don’t want to set your deductible so high that it would be a financial burden to pay. You have to think about your business’s finances and evaluate what you could comfortably afford as a deductible at any given time.
3. Not doing your research on the carrier or reading through the policy carefully.
When you’re buying tow truck insurance, do a little research about the carrier. Make sure that the insurance company you’re considering is financially strong, gets good customer service feedback, and has a positive reputation for how they handle claims. Also, consider how much experience the carrier has writing tow truck insurance and handling commercial auto insurance. You also have to make sure to really read through the policy to make sure you know what is and is not covered.
4. Not asking about payment plans.
Some insurance carriers offer payment plans to help towing businesses stay within their budgets as they get tow truck insurance. Make sure to ask about different payment options when you’re buying tow truck insurance so you can select the one that works best for you.
Pro tip: Ask if there’s a discount for paying in full. Yes, it might be a huge sticker shock, but if you’re comfortably able to pay in full you might end up paying less for insurance in the long run.
5. Not getting garage liability insurance.
Okay, you might wonder why you would ever need garage liability insurance if you don’t have a physical garage location. But it can come in handy even if you don’t have a garage.
Garage liability can help you cover the costs you’re legally obligated to pay if the services your business provides or your day-to-day operations cause someone bodily injury or property damage. For example, if you do roadside assistance and go to change a tire, garage liability can help cover you if the tire you just changed comes off the car and causes the driver to get into an accident.
6. Thinking that your auto or primary liability insurance will cover losses to your truck.
Auto liability insurance only covers your legal obligation to the other driver if you’re at-fault in an accident. It can cover the other driver’s medical bills and any court-ordered damages you have to pay, and it will pay to repair or replace their car. But it will not pay to repair or replace your tow truck.
You would need physical damage insurance if you wanted to protect your business from a financial loss if your tow truck is damaged. Physical damage insurance is made up of collision coverage and comprehensive coverage. Collision coverage will repair or replace your truck if you’re an accident or if you collide with something. Comprehensive coverage will cover you if your truck is damaged by something other than an accident, such as vandalism, fire, or falling objects (like trees.) It will also cover theft.
To put it simply, your auto liability insurance does not cover your truck, so you may want to consider physical damage coverage when you’re buying tow truck insurance. (And you can get quotes for physical damage insurance and work with our tow truck insurance experts to make sure you have the coverage you need.)
7. Using your income to calculate your repo percentage.
If your business does both repossessions and regular tows, the agent will probably ask what percentage repo you are. You have to calculate that percentage based on the number of jobs you do, not the income you receive from each type of job. Insurance companies use the number of jobs for repo percentages because repos usually pay a lot more than regular tows. Income is not an accurate way to determine what percentage of your work is repo.
To give a quick example: If you do 70 tows in a month and 15 of those are repos, your repo percentage would be about 21%.
It’s important to calculate this correctly when buying tow truck insurance because the percentage of repo work you do affects the cost of insurance for your repo business.
8. Not shopping for your insurance.
You can save money on your tow truck insurance by shopping around and getting multiple quotes. It’s important to compare coverages and pricing. Yes, you might just want to get your insurance over with by going with the first company you get a reasonable quote from, but by taking a little bit of time to shop you can really save yourself some money. You might find the same coverage at a lower price.
And if you’d like to enlist the help of one of our tow truck insurance experts to shop for you, we would be more than happy to lend you a hand. We can help you get multiple quotes, look at different coverages, and compare pricing. And we’ll also help make the insurance process easy…and help you avoid the above tow truck insurance mistakes! To get started with your tow truck insurance quotes, fill out our online form or give us a call today.