Does My Tow Truck Business Need Garage Keepers Insurance?

If you run a towing business, you face an abundance of risk everyday. Since every tow truck business is different, they all need a unique insurance plan that’s customized for their specific needs. One type of insurance that you might want to consider for your operation is garage keepers liability insurance. We’ll explain what this is and how it can protect your business from being stuck with any large unwanted bills.

What is Garage Keepers Insurance?

This type of insurance will protect your business while you have clients’ vehicles in your care, custody, and control. That basically means that you’re responsible for the vehicle. Let’s say that you’re called to a tow in the middle of the night and the car needs to go to a service shop. However, the client’s favorite mechanic doesn’t open until morning. You take the car to your own premise to store it until you’re able to drop it off in the morning. Therefore, the client’s car would be in your care, custody, and control while it’s on your property.

But what would happen if there was a fire at your shop and the vehicle was destroyed? Chances are your client wouldn’t be too happy that their car has been torched. This insurance would come to the rescue and help you take care of the loss. So, when you’re considering what kind of insurance you need for your tow truck business, you may want to consider garage keepers insurance.

What Does It Cover?

There are several losses that garage keepers will protect your businesses from – and of course, there are plenty of ways that your clients’ cars could run into trouble while in your care. The losses that are typically covered are…

  • Fire
  • Theft
  • Vandalism
  • Explosion
  • Lightning



How Much Do I Need?

To determine how much garage keepers insurance you might need, think about how many cars you have in your care, custody, and control at any given time. Then figure out the average value of the vehicles. If you multiply the two numbers together, you’ll get a good idea of how much coverage you need. For instance, let’s say you usually have six cars in your care. The average value of those cars is $20,000 each. You would need at least a $120,000 garage keepers policy.

What’s the Deductible?

The type of deductible that it usually has is a per-vehicle deductible. This means that you have to pay the deductible for each vehicle that was damaged or destroyed by a loss.

For example, let’s say your per-vehicle deductible is $1,000. If there was a fire at your shop and three cars were destroyed, you would have to pay $1,000 for each car, so your cost before insurance stepped in would be $3,000.

When you’re selecting your deductible, you have to consider how much money your business can comfortably afford to pay if you had a claim. Even though setting a higher deductible may help you save some money on your premiums, you don’t want the deductible to be a huge financial burden that would put a strain on your business if you had to pay it.

What’s excluded From the Garage Keepers Coverage?

There are a few things that are not covered by garage keepers insurance.

Exclusions include…

  • Contractual obligations
  • Theft of vehicles by the insured
  • Defective parts/faulty work
  • Loss to sound equipment (unless the system is installed permanently)
  • Radar detection equipment


Summing Up

The risks faced by tow truck businesses are numerous. When a client leaves their car in your business’s care, it becomes your responsibility. Life often takes unexpected turns, so it’s important to be prepared for anything. Garage keepers can protect your business if anything ever happens to your clients’ vehicles while they’re under your care.

Do you want to save some money on your tow truck insurance? We can help with that – we have relationships with numerous tow truck insurance carriers, so we can help you shop for the best rate. We know that tow truck insurance rates have been going up, so our mission is to help businesses like yours save some money. To get tow truck insurance quotes, just fill out our online quote form or give us a call today.


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