Insurance 101 for Towing Companies

A Guide to The Insurance Requirements for Top Roadside Assistance Networks

Growing up in North Dakota and having our main office in Wisconsin, I’m no stranger to harsh winters. Driving through long stretches of desolate interstate covered with snow and ice, there are two heroes you know you can count on if anything goes wrong: the highway patrol, and tow truck operators. No matter how dangerous it is, tow truck operators are always there when you need to be rescued from an icy stretch of I-94 or pulled out of a ditch in the middle of nowhere. Time Magazine ranks tow operators among the top 10 most dangerous professions. Unfortunately, dangerous, unpredictable professions usually mean one thing – complicated and expensive insurance requirements. In this article, you’ll learn about the insurance requirements for towing providers contracting with top roadside assistance networks, and how to meet those requirements without breaking the bank.  

Contracting with Top Roadside Assistance Networks

One of the most common and efficient ways to make money as a towing company is to contract with roadside assistance networks, clubs and insurance providers. Some of the most common networks for towing providers are AAA, Agero, Honk, Pinnacle Motor Club, Road America, Waste Management, and Urgent.ly. When you apply to become a service provider with one (or several) of these networks, they will require you to provide a certificate of insurance that meets their insurance requirements. 

It sounds simple enough, but the requirements vary significantly from contract to contract, and are often difficult to understand without a deep knowledge of insurance terminology. To simplify the process, we’ve broken down the insurance requirements for the top towing networks. This guide will teach you exactly which coverages, limits, and endorsements are required, what they cover, and how to meet your requirements quickly and affordably. 

Insurance Requirements for Towing Providers

We were surprised by how much towing providers insurance requirements varied from network to network. We also know it can be frustrating to meet some of these requirements, because the limits aren’t readily available from most carriers. For example, if you have a policy through Progressive, you would be unable to meet Agero’s $150K On-Hook requirement. 

To simplify the process, we’ve pre-built policies that meet each of the top towing provider networks’ requirements. Learn about the elements in your insurance requirement below, and explore pre-packaged Towing Service Provider policies in the following section.

Breaking Down Towing Providers’ Insurance Requirements

Most roadside assistance networks require the same coverages at different limits. Coverages determine what the insurance policy covers. Limits determine how much your insurance company will pay if you have a claim.

General Liability

General Liability Insurance covers third party injury and property damage. Waste Management requires you to have a $2M per occurrence limit, and a $3M aggregate limit, meaning that your insurer will pay up to $2M per incident, and up to $3M throughout your policy period. 

Automobile Liability

Your commercial auto policy will cover damages and injuries that you caused while using your vehicle. For example, if you got into a fender bender while dispatched, your auto policy would cover it. If you don’t own the vehicle, you’ll likely need Hired and Non-Owned Auto coverage. However, these do not cover damages to the cars that you’re towing – that’s where On Hook comes in.

On Hook / Cargo & Garage Keepers

On Hook covers damages to a customer’s vehicle that happen while you’re actively towing it. Cargo covers the items inside the vehicle. For example, if a car door opened while being towed, On-Hook would cover damages from the door scraping against the highway, while Cargo would help replace the items that fell out of the car.

Once the vehicle you’re towing is Off Hook and in your storage facility, your Garage Keepers’ policy takes over. Garage Keepers’ covers damages that take place while you’re storing a vehicle, either to repair or while waiting for the owner to claim it. 

Workers’ Compensation

Workers’ compensation covers the employees of your business. Nearly every network requires you to meet the legal limits determined by your state. If you don’t have any employees, you likely won’t be required to purchase workers’ compensation. Check your state’s requirement here to see what you’ll need!

Certificate Holder

Most towing network insurance requirements require you to list the network as a certificate holder. This grants them access to view details and updates on your policy, such as cancellation notifications. You’ll need to include the correct address in the certificate holder section of your Certificate of Insurance. View the address for your network in the detailed requirement article, or select a pre-made policy below, which has certificate holder and additional insured requirements built in.

Additional Insured

Adding the towing network you’re contracting with as an additional insured extends your coverage to them as well. For example, if a customer were to sue AAA because of your actions – rather than sue you personally – AAA would be able to access your coverage. 

Networks will often require very specific wording in the additional insured section of your certificate of insurance. Check your contract for the specific wording that your Network requires or select a pre-made policy below, which has certificate holder and additional insured requirements built in.

How to Meet Your Service Provider Insurance Requirements

Aside from fuel and labor, insurance costs make up a significant portion of a tow operators expense – and it’s not getting any cheaper. Because there are fewer and fewer carriers in the commercial auto market, the prices have gone up significantly over the past year. We’re working on changing that, and helping carriers get into the market with new, affordable products to support the towing industry. 

To simplify the process for you, we’ve created packages unique to the requirements of each roadside assistance platform. For tow operators needing coverage, all you have to do is select the roadside assistance network you’ll be contracting with, and fill out a quick, 5 minute application. A licensed insurance advisor will reach out to make sure you have exactly what you need, and search for the best available price among our network of specialty towing insurance carriers. We also have financing options available, so you can pay on terms that are convenient for you.

If you’re contracting with multiple networks, select the one with the highest requirement, and let the advisor know! Most roadside assistance networks require that you list them as certificate holder and additional insured on your certificate of insurance. So, even if their requirements are the same, you’ll still need multiple certificates created. Our team of advisors will make sure you have a Certificate of Insurance for each company. 

Learn More about Your Network:

Detailed insurance requirements for towing and non-towing providers, pre-made policies, and helpful tips for each specific company:

If you already have an agent or broker you’re working with, make sure you’re specific about what the network requires. If helpful, feel free to direct them to this page as a resource. We’re actively working every day to bring prices lower and improve solutions available!

If your interested in learning more visit https://www.buildbunker.com/ or contact us at support@buildbunker.com