Tow Truck Insurance Cost Per Month: What You Need To Know

Operating a tow truck business can be lucrative, but also comes with risks. That’s why having the right insurance coverage is crucial. But how much does it really cost to insure a tow truck each month?

In this comprehensive guide, we’ll break down the average monthly cost of tow truck insurance, the different types of coverage you need, and factors that impact your rates.

Average Monthly Cost of Tow Truck Insurance

The average tow truck insurance cost per month is around $450 for basic liability and physical damage coverage. This equates to $5,000-6,000 per year to insure a single truck used for standard roadside assistance and recovery towing.

However, your actual rates will depend on several factors:

  • Your location
  • Type of trucks
  • Services provided
  • Driving records
  • Business experience
  • Safety protocols
  • Coverage limits

For a small towing business, you’ll also need general liability insurance, which covers third party injuries or property damage. This averages $97-$159 per month.

Overall, base coverages for a single basic tow truck run $550-$600 per month on average. Costs scale up from there as you add trucks, employees, and specialized services.

Main Types of Tow Truck Insurance Coverage

Tow truck insurance contains three core components:

  • Liability insurance – Covers injury and damage to others caused by your truck and drivers. Required by law.

  • Physical damage – Repairs or replaces your truck if damaged. Includes collision, comprehensive, and fire/theft.

  • On-hook coverage – For damage to vehicles while being towed.

You may also need these additional coverages:

  • General liability – Protects your business assets if sued.

  • Garagekeepers liability – Covers customer vehicles in your care.

  • Workers’ compensation – Pays for employee injuries. Required in most states.

  • Uninsured motorist – Covers your costs if hit by an uninsured driver.

Let’s look at each in more detail:

Tow Truck Liability Insurance

This is one of the most important coverages for tow truck businesses. Tow truck liability insurance covers injury claims, property damage, and legal expenses if one of your trucks is involved in an accident.

Minimum liability limits are:

  • $100,000 bodily injury per person
  • $300,000 bodily injury per accident
  • $50,000 property damage

However, experts recommend at least $500,000 to $1 million in total liability coverage. This ensures you’re protected from major claims, lawsuits, and legal fees.

Without enough liability insurance, you’re personally responsible for any costs that exceed your policy limits.

Physical Damage Coverage

Physical damage coverage pays to repair or replace your tow truck if it’s damaged or stolen. There are three components:

Collision – Repairs your truck after an accident, regardless of fault.

Comprehensive – Covers damage from theft, vandalism, floods, fires, and falling objects (like tree branches).

Specified perils – Fire, lightning, and explosion damage only. Cheaper but less protection.

Physical damage ensures you can get your truck back on the road quickly after an incident and avoid lost income. Your deductible choices impact your premiums.

On-Hook Coverage

Also called “hooking and lifting” insurance, on-hook coverage protects you if a customer’s vehicle is damaged while attached to your tow truck. Coverage limits usually range from $100,000 to $250,000.

Even with safe driving, accidents can happen while loading, securing, or transporting a vehicle. On-hook insurance gives you critical protection so your business isn’t liable.

Garagekeepers Liability Insurance

If your company stores or repairs vehicles, garagekeepers liability can be vital. It covers customer cars that are damaged, vandalized, or stolen while left in your care and custody.

Standard limits are $100,000 to $500,000. Make sure your policy matches the value of cars you accept.

General Liability Insurance

While tow truck liability covers driving-related accidents, general liability insures your business operations and facilities. It pays for property damage, bodily injuries, and lawsuits stemming from your premises, equipment, employees, and more.

For small tow firms, $500,000 is usually adequate. Larger companies need $1-$2 million for sufficient protection.

Workers’ Compensation

Almost every state requires employers to carry workers’ comp, which pays for medical care and lost wages if employees get hurt on the job. This includes tow truck drivers.

Premiums vary based on payroll, job duties, and claims history. On average, expect to pay $15 to $30 per $100 of payroll for workers’ compensation.

Uninsured Motorist Coverage

Uninsured motorist insurance covers your vehicle and occupants if you’re struck by a driver with no liability insurance.

It takes over the financial responsibilities that should fall to the at-fault driver’s insurer. This helps pay your accident-related costs so you don’t take a huge loss.

What Impacts Tow Truck Insurance Rates?

Many factors determine your exact tow truck insurance premiums, including:

  • Location – Densely populated and accident-prone regions have higher rates.

  • Number of trucks – More trucks equals greater risk and higher premiums.

  • Driver records – Clean driving histories score lower rates.

  • Business experience – New firms pay more until they establish safe operations.

  • Services – Repossession and heavy-duty towing are riskier.

  • Operation hours – Late night/overnight services mean higher costs.

  • Truck use – Personal, business, or commercial use affects rates.

  • Truck type – Heavy duty or light duty trucks have varying insurance costs.

  • Safety policies – Following regulated safety guidelines can reduce premiums.

  • Claims – Frequent claims drive rates up. Staying claims-free saves you money.

  • Deductibles – Higher deductibles lower your monthly premiums.

  • Coverage limits – Minimum liability limits cost less than higher amounts.

Getting quotes from multiple insurers is the best way to find affordable rates tailored to your specific business. An independent agent can help you shop and compare.

How to Reduce Your Tow Truck Insurance Costs

While you should never skimp on necessary coverages, some strategies can help control your tow truck insurance premiums:

  • Raise deductibles – Opt for higher deductibles like $2,500 to lower rates. Have funds reserved to pay those costs if needed.

  • Limit drivers – Restrict who can drive your trucks to the safest, most experienced operators.

  • Implement safety protocols – Driver screening, regular truck maintenance, and accident prevention procedures may qualify you for discounts.

  • Choose liability limits carefully – Consider both financial risks and premium costs when selecting coverage limits. Don’t go too low.

  • Ask about discounts – Take defensive driving courses, bundle policies, or join trade groups to unlock discounts.

  • Maintain good credit – Companies may use credit-based insurance scores to set rates. Keep your credit score in good shape.

  • Drop unnecessary coverage – If your truck value is very low, collision and comprehensive may not be cost-effective.

  • ** Comparison shop** – Get quotes from multiple insurers to find the best value for your specific situation. Rates can vary a lot between companies.

The Bottom Line on Tow Truck Insurance

Protecting your towing business with proper insurance is essential, but doesn’t have to cost a fortune every month. Understanding average costs, required coverages, and ways to optimize your rates is key.

For most basic single-truck operations, plan on budgeting approximately $550 to $600 per month for baseline tow truck insurance. Take time to shop around, discuss your risks with an agent, and focus on value when choosing a policy.

Next Steps for Tow Truck Insurance

Now that you know what tow truck insurance entails, it’s time to get down to business:

  • Learn your state laws – Make sure you meet all minimum liability and workers’ comp requirements.

  • Document your operations – Gather details on your trucks, drivers, locations, services, safety programs, and clients.

  • Compare quotes – Reach out to providers like independent agents, who can compare multiple carrier rates.

  • Review coverage options – Discuss risks, necessary policies, reasonable limits, and cost-saving techniques with agents.

  • Select a top provider – Choose an insurer that offers the coverage, service quality, and premium value you need.

  • Pay close attention at renewal – Shop around again when your policy expires to ensure you still have the best deal.

Owning a towing company comes with serious risks – don’t take them lightly. But with an experienced independent insurance agent guiding you, it’s easy to

How Much Is Tow Truck Insurance Per Month?


How much is tow truck insurance per month in California?

A general liability policy is also required by state law; the average price for a standard general liability policy for a small tow truck business with minimum coverage averages at $97 to $159 per month. Your insurance agent should be able to help you tailor a policy that covers those basic requirements.

How much does tow truck insurance cost in Florida?

Most insurers charge Florida residents around $10,000 to $20,000 per annum for a standard tow truck insurance policy. Truckers who primarily operate on rural roads might get cheaper rates. However, urban truckers who regularly drive through heavy traffic and harsh roads will receive pricier policies.

How much is insurance on a tow truck in Michigan?

Annual Cost*
Liability (Bodily Injury + Property Damage)
$5,000 – $7,000
Physical Damage
$1,000 – $3,000
On-Hook Towing (Bundled with Liability Insurance)
$4,200 – $9,600
Garage Keepers Legal Liability
$1,000 – $1,300

What is a heavy duty tow?

Heavy-duty towing is a type of towing that requires special equipment and training. Heavy-duty tow trucks are designed to handle hefty loads, and they must be operated by certified professionals.

Leave a Comment