Tow Truck Insurance Brokers: Everything You Need to Know Before You Buy
One of our brokers got a call last month from a towing company owner in Houston. He’d just landed a contract with the city police department—huge opportunity—but they required $2 million in liability coverage and something called “on-hook” insurance. He had no idea what that meant or where to even start.
“Can’t I just get regular commercial auto insurance?” he asked.
We hear this all the time. And honestly? If only it were that simple.
Tow truck insurance isn’t like insuring a plumber’s van or a landscaper’s pickup. You’re hauling other people’s vehicles—sometimes worth $100,000+. You’re working on highways at 2 AM. Your trucks weigh 20,000 pounds. One mistake and you’re looking at a six-figure lawsuit.
Let us break down what you actually need, what it costs, and how to find a broker who knows this industry inside and out. Because the wrong coverage could put you out of business faster than a repo gone wrong.
What Makes Tow Truck Insurance Different (Hint: Everything)
Standard commercial auto insurance? That covers your truck driving down the road. But the moment you hook up someone else’s vehicle, you’ve entered a completely different risk category.
Here’s what most people don’t realize:
Your truck is now responsible for TWO vehicles—yours and the one you’re towing. If that BMW you just hooked up falls off your flatbed on the highway? Your regular commercial auto policy isn’t covering that $85,000 claim.
And that’s just the beginning.
We’ve worked with towing companies for over 15 years, and we still see operators who are massively underinsured. They have basic liability, maybe some collision coverage, and they think they’re good. Then they tow a Tesla, the battery catches fire in their yard, and suddenly they’re facing a $200,000 lawsuit with no coverage.
(Yeah, that actually happened to one of our clients. Painful lesson.)
The Coverage You Actually Need (Not What Some Agent Sold You)
Let’s talk about what real tow truck insurance looks like. This isn’t optional coverage—this is the stuff that keeps you in business.
1. Commercial Auto Liability (The Baseline)
This is your basic “we hit someone” or “someone hit us” coverage. Most states require $750,000 to $1 million minimum.
But here’s the thing: That’s almost never enough for a towing company.
Why? Because when a 25,000-pound wrecker rear-ends a minivan full of people, the medical bills alone can hit $500,000. Add property damage, lost wages, pain and suffering? You’re looking at multi-million dollar exposure.
We recommend $2 million minimum. Costs about $8,500-$15,000 annually for a small fleet, depending on your location and driver records.
2. On-Hook Coverage (The One Everyone Forgets)
This is the big one. This covers vehicles while they’re being towed.
Customer’s car falls off your flatbed? On-hook coverage.
You’re towing a Porsche and someone rear-ends you, totaling the Porsche? On-hook coverage.
Repo job—truck gets scratched while you’re loading it? On-hook coverage.
Without this, you’re personally liable for every vehicle you touch. We’ve seen claims range from $5,000 (minor damage to a Honda) to $180,000 (totaled Maserati that slid off a flatbed).
Cost: Usually $2,500-$6,000 per truck annually. Non-negotiable if you’re doing any kind of professional towing.
3. Garagekeepers Legal Liability (For Your Storage Lot)
Got a impound lot? Storing vehicles overnight? You need this.
This covers customer vehicles while they’re in your care, custody, or control—but NOT being towed. That’s important. If someone’s car is sitting in your lot and a tree falls on it? Garagekeepers pays.
One of our clients had a storm come through, destroyed six vehicles in his yard. $75,000 in damage. His garagekeepers policy covered every penny.
Cost: $1,500-$4,500 annually depending on lot size and value of vehicles stored.
4. Physical Damage (For Your Trucks)
This is basically collision and comprehensive for your tow trucks. Your truck hits a pole? Covered. Someone steals your wheel lift? Covered.
Here’s where it gets tricky: Tow trucks depreciate fast, but replacement costs are insane. A new heavy-duty wrecker runs $150,000-$300,000. Make sure your policy has actual cash value OR agreed value coverage.
We’ve seen operators with $100,000 trucks insured for $60,000 because the policy was written wrong. Truck gets totaled, they get a check for $60,000, and they’re scrambling to finance the gap.
Cost: $3,000-$8,000 per truck depending on value and deductible.
5. General Liability (Someone Gets Hurt at Your Shop)
Completely separate from auto liability. This covers slip-and-fall at your office, property damage from your operations, and injury to third parties not related to vehicle accidents.
Customer trips over a chain in your shop and breaks their arm? General liability.
Your equipment damages someone’s garage while doing a recovery? General liability.
Cost: $1,200-$3,500 annually for basic coverage.
6. Workers Compensation (Because Your Drivers Will Get Hurt)
If you have employees, most states require this. And even if they don’t, you want it.
Towing is dangerous work. Drivers work in traffic, handle heavy equipment, lift chains and cables. We’ve processed workers comp claims for:
- Crushed fingers (constant)
- Back injuries from winching (very common)
- Getting hit by passing vehicles (thankfully rare, but devastating)
Cost: Varies wildly by state, but expect $4,000-$12,000 per employee annually. Your rates depend on payroll and claims history.
7. Repossession Coverage (If You Do Repo Work)
Repo is its own beast. You need specialized coverage for:
- Wrongful repossession claims
- Property damage during recovery
- Assault and battery (yes, seriously)
- Storage of repossessed vehicles
Standard tow truck policies often exclude repo work. We’ve seen operators get slammed with claims only to find out their policy doesn’t cover repossessions at all.
One of our brokers worked with a repo operator who got sued for $50,000—wrongful repo claim. Turns out his “tow truck insurance” excluded repo activities. He had to pay out of pocket.
Cost: Add $3,000-$8,000 annually to your premium for proper repo coverage.
What Tow Truck Insurance Actually Costs (Real Numbers)
Okay, let’s get specific. Because “how much is towing insurance” is the question we get most, and the answer is… it depends.
For a small operation (1-2 trucks, light duty):
- Commercial Auto Liability: $6,000-$10,000
- On-Hook Coverage: $3,000-$5,000
- Garagekeepers: $1,500-$3,000
- Physical Damage: $4,000-$6,000
- General Liability: $1,200-$2,000
- Workers Comp (2 employees): $8,000-$15,000
Total: $23,700-$41,000 annually
For a mid-size operation (5-8 trucks, mixed light/heavy duty):
- Commercial Auto Liability: $25,000-$45,000
- On-Hook Coverage: $12,000-$25,000
- Garagekeepers: $3,500-$7,000
- Physical Damage: $20,000-$40,000
- General Liability: $2,500-$4,000
- Workers Comp (8 employees): $35,000-$65,000
Total: $98,000-$186,000 annually
(See why this isn’t “just regular truck insurance”?)
What affects your rates:
| Factor | Impact on Premium |
|---|---|
| Driver records (DUIs, accidents, violations) | +30-80% for bad records |
| Claims history | +20-50% if you’ve had multiple claims |
| Types of towing (repo vs. roadside) | Repo adds 25-40% |
| Service area (urban vs. rural) | Urban is 15-30% higher |
| Fleet age and condition | Newer trucks get 10-15% discounts |
| Safety programs and training | Can reduce 5-15% |
| Credit score (yes, really) | Poor credit adds 10-25% |
We had a Houston towing company come to us paying $78,000 annually with another broker. After reviewing their setup, we found:
- Three accidents that shouldn’t have been on their record (properly documented but never removed)
- Drivers who’d completed defensive driving but weren’t getting the discount
- Wrong classification (they were coded as “heavy duty” but did mostly light duty work)
We got them down to $62,000 with BETTER coverage. That’s $16,000 back in their pocket.
Why Working with a Specialized Broker Actually Matters
Look, you can call Progressive or Hartford directly and get a quote. They’ll happily sell you “tow truck insurance.”
But here’s what we’ve noticed over the years: The big carriers don’t really understand this business. They have preset packages. You either fit into Box A or Box B, and if you don’t, they force you into one anyway.
What a specialized broker brings:
1. Access to Multiple Markets
We work with 15+ carriers who specialize in towing. Some are great for repo work. Others are better for heavy-duty recovery. Some have better rates in Texas, others in Florida.
One carrier might quote you $85,000. Another quotes $58,000 for the same coverage. Without a broker who knows these markets, you’d never find that $27,000 difference.
2. Understanding of the Industry
We know what “on-hook” means. We know the difference between a wheel lift and a flatbed. We understand why repo work is higher risk than AAA roadside service.
That sounds basic, but we’ve reviewed policies from direct-sold carriers where critical coverage was missing because the agent didn’t understand the operation.
3. Claims Advocacy
When you file a claim, who’s on your side? If you bought direct, you’re dealing with the insurance company’s claims adjuster—their job is to pay as little as possible.
When you work with us, our team helps you document everything, negotiates with adjusters, and makes sure you get what you’re entitled to.
One of our clients had a $45,000 on-hook claim. Initial offer from the carrier: $28,000. We got involved, provided proper documentation, and got them the full $45,000. That’s what a broker does.
4. Policy Reviews and Updates
Your business changes. You add trucks, hire drivers, expand into new services. A good broker reviews your coverage annually and adjusts as needed.
We caught a client who’d added three trucks but never updated their policy. They were driving $450,000 worth of equipment with coverage for only two trucks. One accident and they’d have been massively underinsured.
Red Flags When Shopping for Coverage
Not all insurance brokers are created equal. Here’s what to watch out for:
🚩 They quote you without asking about your specific operations
Real question we ask: “What percentage of your work is repossession vs. roadside vs. impound?” If a broker doesn’t ask this, they’re guessing at your coverage needs.
🚩 They can’t explain the difference between on-hook and garagekeepers
If they say “it’s all the same thing,” run. These are completely different coverages with different triggers and limits.
🚩 They push one specific carrier without shopping around
Good brokers compare 5-10 quotes. If they’re only showing you one option, they’re either captive (only sell one company) or lazy.
🚩 The quote seems too cheap
If everyone else is quoting $50,000 and one broker quotes $30,000, there’s a reason. Usually it’s missing coverage, lower limits, or higher deductibles buried in the fine print.
🚩 They don’t ask about your drivers
Driver records are HUGE in towing insurance. A broker who doesn’t request MVRs (motor vehicle records) isn’t doing their job.
Questions to Ask Before You Sign
Before you commit to any policy, ask:
“Does this policy cover on-hook incidents for the full value of vehicles we tow?”
Some policies cap on-hook coverage at $50,000 per vehicle. If you’re towing luxury cars or commercial equipment, that’s not enough.
“Are repossessions covered, and if so, what are the exclusions?”
Get this in writing. “Wrongful repossession” claims can be $100,000+.
“What’s my actual out-of-pocket cost if I total a customer’s $80,000 vehicle while towing?”
Walk through the scenario. Make them explain deductibles, coverage limits, and any gaps.
“What happens if one of my drivers gets a DUI? How much will my rates increase?”
You need to know the worst-case scenario.
“Can I get certificates of insurance within 24 hours for new contracts?”
If you’re bidding on municipal or fleet contracts, you need certs fast. Make sure your broker can deliver.
Real Talk: Is It Worth Shopping Around?
Yes. Always.
We’ve seen premium differences of 30-40% between carriers for the exact same coverage. Sometimes it’s because of carrier appetite (one carrier loves repo work, another hates it). Sometimes it’s because of territory (certain carriers get better rates in certain states).
But here’s the thing: Shopping around takes time and industry knowledge. You need to know which carriers specialize in towing, understand their underwriting criteria, and be able to compare apples to apples.
That’s literally what specialized brokers do all day.
Bottom Line: What You Actually Need to Do
Step 1: Get your operation details together
- Number and types of trucks
- Annual mileage per truck
- Types of towing (light duty, heavy duty, repo, etc.)
- Number of employees and their driving records
- Your claims history for the past 5 years
Step 2: Find 2-3 brokers who specialize in towing Not general commercial insurance agents. Brokers who understand this specific industry.
Step 3: Get detailed quotes Make sure every quote includes:
- Commercial auto liability (minimum $2M)
- On-hook coverage (at least $100K per vehicle)
- Garagekeepers legal liability
- Physical damage on all trucks
- General liability
- Workers compensation
- Repo coverage if applicable
Step 4: Compare coverage, not just price The cheapest quote is usually missing something.
Step 5: Review annually Your business changes. Make sure your coverage keeps up.
Look, tow truck insurance is complicated. You’re dealing with multiple vehicles, high-value assets, dangerous working conditions, and serious liability exposure. One gap in coverage could cost you everything you’ve built.
We’ve been helping towing companies get proper coverage for over 15 years. Our brokers understand on-hook vs. garagekeepers, know which carriers specialize in repo work, and can get you competitive quotes from multiple markets.
If you’re currently shopping for coverage, or if you’re not 100% confident your current policy has you properly protected, let’s talk. We’ll review what you have, explain what you actually need, and give you honest guidance—even if that means telling you your current coverage is fine.
Sometimes the best sale is no sale at all. But if we can save you $15,000 a year or prevent a $200,000 coverage gap, that conversation is worth 20 minutes of your time.
Get a Free Tow Truck Insurance Quote
Frequently Asked Questions
How much does tow truck insurance cost?
For a small operation (1-2 trucks), expect $23,000-$41,000 annually. Mid-size operations (5-8 trucks) typically pay $98,000-$186,000. Costs vary based on driver records, types of towing, location, claims history, and coverage limits. Repo work adds 25-40% to premiums.
What’s the difference between on-hook coverage and garagekeepers insurance?
On-hook covers vehicles while being towed (in motion). Garagekeepers covers vehicles while stored or parked at your location (not moving). You need both—they cover different scenarios and aren’t interchangeable.
Does regular commercial auto insurance cover tow trucks?
No. Standard commercial auto only covers your truck driving down the road. It doesn’t cover vehicles you’re towing (on-hook), vehicles in your yard (garagekeepers), or specialized towing risks. You need specialized tow truck insurance.
Is repossession work covered under standard tow truck insurance?
Usually no. Most standard tow truck policies exclude repossession activities. You need specific repo coverage that includes wrongful repossession claims, property damage during recovery, and assault/battery coverage. Always verify repo coverage is explicitly included.
How can I lower my tow truck insurance costs?
Improve driver records (defensive driving courses), implement safety programs, maintain newer trucks, improve credit scores, shop multiple carriers, increase deductibles (carefully), and work with a specialized broker who can access multiple markets for competitive quotes.
About Hotaling Insurance Services
The Hotaling Insurance team has been helping towing companies across the country get proper coverage for over 15 years. Our commercial auto specialists work with 15+ carriers who specialize in towing operations, and we understand the difference between light-duty roadside service and heavy-duty recovery work. We know what on-hook coverage means, why repo work needs special endorsements, and how to get you covered properly without overpaying.
Reviewed by: The Hotaling Team Commercial Brokers
Review Date: December 11, 2025
Disclaimer: This article is for informational purposes only and does not constitute insurance advice or a guarantee of coverage. Tow truck insurance requirements and rates vary by state, operation type, and carrier. For specific coverage recommendations, please consult with our licensed commercial insurance broker who specializes in towing operations.