If you have a tow truck business that does repo you know that your line of work comes with lots of risks – there are the incidental risks of driving and towing, of course, but there are also risks specific to repo that you’re exposed to every time you go on a job. And that’s why it’s so important to get the right tow truck insurance for your repo business. But how much does repo insurance cost? We’ll explain what wrongful repo insurance is and how much insurance for a repo business costs.
What is wrongful repo insurance?
There’s always the chance that, one day, you could repossess a car that you’re not supposed to. And that wouldn’t be good – you could run into trouble…and legal expenses. Wrongful repo insurance could help if you encounter a worst-case-scenario in which the car on your truck shouldn’t be there.
There are a few ways this could happen:
- You take the wrong car.
- You don’t verify that the bank still needs the car before you go to get it. (Sometimes it takes a while for the request to get to you, and in the time that the request was on its way to you the owner of the car could have made their payment.)
- You don’t have a written request. A verbal agreement with the bank is not enough.
How much does insurance for a repo business cost?
First of all, we need to emphasize something: the price or cost of tow truck insurance varies greatly from business to business. Each towing operation – and each repo operation – is different. So, there’s not exactly a definite answer to that question unless you get a quote. (And the wide range of insurance prices is why it’s important to get a tow truck insurance quote.)
However, we can say that a company that has one tow truck and does 25% repo MAY pay about $10,000 a year for their insurance coverage. Again, this is a very rough estimate because of all the factors that affect tow truck insurance rates. Your repo insurance rate could be more or less than that.
Maybe you’re wondering why the price is so high – it seems expensive. That’s because risk is not an insurance company’s favorite thing. The higher your chance of filing a claim or having a loss, the higher your rates could be. With repo, there are a few potential losses that insurance companies are concerned about.
- People who assault the repo driver. People usually don’t like it when their cars get taken away. Someone could get extremely angry and attack your driver to prevent them from taking the vehicle.
- Night driving. To avoid getting attacked by angry car-owners, you or your drivers may go out at night to repossess cars. That also creates risk.
- Wrongful repossession. This is the scenario we mentioned above where you take a car you’re not supposed to.
- Speed. Sometimes the goal of a repo is to get out of there as soon as possible. As a result, you or your drivers might not properly secure the chains until you can wheel away and get to a safe place. But that could be an issue if the car decides it doesn’t want to stay put.
But this next part is really important:
You have to think about the percentage of repo work that you do (if you don’t just do repossessions.) The percentage of repo you do affects your rates, so the agent getting your quotes will probably ask about it. Some important notes:
- If you do only 5% repo or less, your rates will probably be the same as if you did not do repo at all.
- If you do more than 50% repo, insurance companies will probably see your business the same as if you did 100% repo…and that means your rates could increase 100% over what you would be paying if you did not do repo.
How to calculate your repo percentage.
It’s important that you calculate your repo percentage correctly if the agent asks you about it.
You have to use the number of tows or jobs you do, not your revenue from each type of job (regular tows versus repossessions.) The insurance company views repo percentage based on the number of jobs and not earnings because repossessions typically pay much more than ordinary tows. It wouldn’t be accurate to go by your earnings, so they go by the jobs.
For example, let’s say you do 65 tows a month and eight of those are repossessions. Your repo percentage would be 12%.
Get a quote for your repo business.
As we discussed, each tow truck business will pay a different rate for their insurance. The best way to get an accurate idea of how much tow truck insurance costs for your business is to get a tow truck insurance quote from a trustworthy insurance professional. That way you’re getting a rate that’s based on all of the relevant details about your business.
We also recommend that you shop around for your insurance. That means you get multiple quotes for your coverage so you can compare coverages and pricing – and save money on tow truck insurance. If you want some help shopping for tow truck insurance, you’re in the right place. We have a whole team of tow truck insurance experts who can help you shop for your quotes. You can get started with your tow truck insurance quotes by filling out our form or giving us a call today.