Insurance for Towing Operations and Repossession Companies

Different elements of insurance coverage offer protection in relatively restricted spheres of activity.  For example, garage liability insurance, while a key requirement for dealerships, repossession, and towing garages, and repair shops, covers property damage and injury from the course of operations of an auto garage, not the cars right on the property that belong to other individuals or business entities.

In the course of your client’s business and the varied day-to-day tasks, they will run into circumstances that require coverage for repossessed vehicles and the potential transportation of other goods, as well as traditional general business liability concerns, coverage for their employees and security personnel, and other gaps that general business liability packages don’t cover. Prime Insurance Company has been helping fill those gaps and ensure that garage, towing, and repossession companies have full coverage for every aspect of the business and can readily respond to any liabilities or claims that can arise.

Of course, nobody wants to face issues during their workday, but it’s an all too common situation for repossessors. Insurance for repossessors ensures that if one of these situations turns into a lawsuit, your clients are not on the hook for legal costs themselves.

There are a few different types of insurance for towing & repo companies from which your clients can choose. A comprehensive policy may also be an option depending on your client and their needs. Prime Insurance Company is happy to work with you to secure the appropriate coverage.

• Wrongful repossession insurance – This is a particularly beneficial product line. This type of coverage provides for damages arising from negligence, error, or omission by auto repossessors. Repossessing the wrong vehicle, for example, would likely be covered by this line. It goes beyond general liability.
• Garage keepers insurance – When the vehicle has been towed or repossessed, it is in the care and control of your client. Garage keepers insurance covers any damage done to the property in their care and control, an important piece of the insurance puzzle. To financial institutions, repossessed vehicles are collateral against outstanding loans, which means these are very valuable items. In the event of weather damage, criminal activity, or other issues that damage that collateral, garage keepers insurance ensures that the vehicle’s value is paid back.
• On-hook liability insurance – Sometimes referred to as motor cargo insurance, on-hook liability insurance protects your towing and repo clients when they have a vehicle on the hook of their tow vehicle. If anything happens to the vehicle while it is attached to your client’s tow truck, the insurance will repair or replace that vehicle, protecting the bank’s collateral and your client’s livelihood.
• Drive-away insurance – This is somewhat similar to on-hook liability insurance but covers insureds when they are physically driving a repossessed or towed vehicle.
• Physical damage coverage – This is important for towing and repo companies that want coverage for their own vehicles. If the tow vehicle is in an accident or damaged in a covered incident, this insurance line pays out to fix or replace the vehicle. The options include collision coverage or comprehensive physical damage coverage, much like personal auto insurance.
• Tow truck insurance – a more comprehensive option, this includes automobile liability, garage keepers legal liability, drive away coverage, on-hook coverage, and more.
• Medical payment insurance – for towing and repo companies, medical payment insurance offers protection for those dealing with the emotions and actions of people whose vehicles are being repossessed or towed. If someone injures your client on the job, this insurance provides for medical bills.

The cost of insurance for towing & repo companies changes based on variables, such as the number of trucks and employees, loss history, and the risk the business faces. Prime Insurance Company is proud to offer insurance even in hard-to-place situations. If your client has been turned down in the past, contact us to see what we can do.

1. Some states require additional certification. While states have preferred and sometimes mandatory insurance minimums, only four states require towing companies to certify that they satisfy those requirements. The four states are Oklahoma, Texas, Colorado, and Montana. So if your client is based in Denison and sometimes does business in Durant, make sure they have the appropriate files.
2. Make sure your client specifically has tow truck insurance. Commercial auto insurance is relatively easy to obtain, but towing and its associated risks can make obtaining the right coverage impossible. If you have a good client on your hands and they need excess coverage beyond what your company usually offers, work with excess and surplus insurance carriers like Prime Insurance Company to fill the gaps and keep your client. This is also important if your client is expanding from towing to include repossession services.

Know ahead of time what kinds of clients you should push for excess liability coverage.

Tow truck insurance and insurance for a whole towing business are based on a range of factors; depending on what area your client primarily does business in, whether they primarily tow cars involved in collisions or they repossess vehicles, and the safety programs your client employs, your client can be very high-risk. Before you have a meeting with prospective clients, know ahead of time what combination of these and other factors should trigger a conversation about excess liability insurance. Having a consistent workflow that adds another level of evaluation is the best way to not only ensure your clients are adequately covered but to know that your company is, too.

Educate your clients so you can get the information you need about specific risks in their business.

Most small businesses are unfamiliar with the particulars of insurance coverage and look as insurance as a single whole instead of a combination of specific coverages and limitations. Taking the time to walk your client through the modularity of some aspects of commercial insurance will let them know the importance of discussing all risks and parts of their business when they might otherwise pass over or not realize the importance of key factors. This is also a good moment to build trust: instead of them thinking you are focused on finding information that will raise their premiums, you can let them know that some coverage areas do not extend into other areas.

Automobile Tow Damage

The cars towed by your clients can be damaged in several ways. They are exposed to road and highway traffic, which means they can suffer damage in a traffic accident. This can happen while securing the car to, or on, the tow truck on the side of the road. Accidents may also happen during the tow itself. If the tow drivers are inexperienced, overworked, or lack enough sleep, mistakes can happen that cause either of these two types of accidents. These risks are especially acute during the winter months in northern states that get frequent snow and ice storms.

In addition to traffic accidents, mistakes in how the cars are secured during the towing process are another risk. Your clients should do their hiring carefully, check their drivers’ motor vehicle records, check their driver logs for excessive hours, and provide proper training.

Automobile Damage or Theft While on Your Clients’ Property

Cars kept on your clients’ property whether inside a garage or on its parking lot are subject to several risks. It’s not unusual for these garages to have flammable liquids such as solvents and fuel. Repair work may cause sparks from cutting tools or welding equipment. When high-temperature sparks and flames are under the same roof as volatile flammables, fires are a definite possibility.

Auto theft from an unsecured garage or lot is yet another risk. Your clients should run well-organized garages where activities generating high temperatures are carried out in rooms separate from flammable storage areas. They should also implement security measures such as on-premise security systems, cameras, alarms, night lighting, as well as fencing around their lots.