Whether you manage a tow truck business or serve as an independent contractor, you need insurance for towing in case of accidents or bodily injuries. At your earliest convenience, register with the state to obtain all necessary paperwork and information. All tow truck drivers must possess a certificate of insurance to declare their liability coverage. Here are the insurance requirements for tow trucks to help you get started.
Tow Truck Company Insurance Requirements
Operating a tow truck company in Illinois requires more than just a commercial driver’s license and proper vehicle registration. Tow truck businesses must meet specific state and federal insurance requirements to ensure financial protection in case of accidents, property damage, or legal claims. Below is a detailed overview of the key insurance policies that every tow truck company should carry.
1. Auto Liability Insurance
This is the most critical type of insurance required for all commercial tow truck operators. It covers bodily injury and property damage caused by a company’s tow trucks while on the road. Illinois law mandates a minimum of $500,000 in combined single-limit coverage, but many operators choose higher limits to ensure better protection against lawsuits and costly accidents.
2. On-Hook Towing Insurance
This policy protects customer vehicles while they are being towed. If a vehicle is damaged due to an accident, fire, theft, or vandalism while attached to the tow truck, this insurance will cover the cost of repairs or replacement. Illinois requires a minimum of $25,000 in on-hook towing coverage, though businesses may opt for higher limits based on the value of vehicles they tow.
3. Garage Liability Insurance
Garage liability coverage applies to towing businesses that also operate repair shops or storage lots. It provides coverage for bodily injury and property damage caused by business operations, excluding damages to customer vehicles in custody. The minimum required coverage is $500,000 in Illinois.
4. Garagekeepers Legal Liability Insurance
If a tow truck company stores customer vehicles in a lot or garage, this insurance covers damage caused by fire, theft, vandalism, or collision while the vehicle is in the company’s care. Illinois mandates a minimum of $25,000 in garagekeepers legal liability coverage, but many companies choose higher limits based on the number of vehicles they store.
5. Workers’ Compensation Insurance
If your tow truck company has employees, you must carry workers’ compensation insurance to cover medical expenses, lost wages, and disability benefits for employees injured on the job. The coverage requirements depend on company size, but all Illinois businesses with employees are required to carry workers’ comp.
6. General Liability Insurance
Although not always required by law, general liability insurance is essential for tow truck companies. It covers third-party bodily injury, property damage, and legal costs arising from business operations. This can protect your company from lawsuits unrelated to driving, such as slip-and-fall accidents at your facility.
7. Excess Liability (Umbrella) Insurance
To provide additional protection, many tow truck businesses invest in an umbrella insurance policy that extends coverage beyond standard liability limits. This is particularly important for companies that tow high-value vehicles or operate in high-risk areas.
Compliance and Risk Management
Tow truck operators must ensure their insurance policies comply with Illinois state regulations and that proof of coverage is readily available for vehicle registration and business licensing. Additionally, reviewing insurance policies annually and working with an experienced commercial insurance provider can help reduce financial risks and maintain compliance with evolving legal requirements.
Tow Trucking Insurance Registration
You must provide the Secretary of State proof of liability insurance whenever you register or renew your tow truck in Illinois. The state will issue an insurance certificate requiring minimal coverage:
- Auto Liability – $500,000 combined single limit
- Garage Liability – $500,000 combined single limit
- On-Hook Coverages – $25,000
- Garagekeepers Legal Liability – $25,000
- Workers Compensation
You must submit a Certificate of Liability Insurance for each fleet vehicle. You can register a wrecker or boom-type tow truck based on the empty weight of the fully equipped truck. However, you must register rollback or carrier-type tow trucks based on their gross weight.
There are a few clauses that the above liability registration will not affect. A small towing company without a garage or storage facility will not need the $25,000 garagekeepers’ legal liability. Additionally, independent towing drivers without employees do not need worker’s compensation. Lastly, a towing company that only tows its fleet vehicles does not need on-hook coverage.
Certificate of Insurance
The state issues an insurance certificate yearly, expiring on December 31 of the current registration year, unless indicating continuous coverage. This certificate details the make, model, VIN, policy number, and the Secretary of State as the certificate holder. Always double-check that names and addresses match to avoid registration issues.
This certificate must indicate minimum coverage or a combined single limit. Always sign certificate dates within 90 days of the transaction. Otherwise, you must also notify the Secretary of State’s office in writing 30 days before cancellation.
Find Cheap Tow Truck Insurance Today!
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