If you own and operate a small tow truck business, carrying the right insurance is essential to protect you in the event of an accident, property damage, or bodily injury claim.  Just as important, you should register with the state early so you can secure the proper paperwork and stay compliant from day one.  Most tow operators are also required to provide a Certificate of Insurance (COI) that shows active liability coverage.  Below is an overview of common tow truck insurance requirements 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 important 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 on the hook, or 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.  The State of 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 or any contract requirements they need to meet.

3. Garage Liability Insurance

Garage liability coverage provides coverage in the event you are required to temporarily drive the vehicle in order to properly perform a tow.  In most cases, this may be the time when you drive a customer vehicle off of a flat bed, or maybe move a vehicle to reposition it to best hook it.  The minimum garage liability coverage required in Illinois is $500,000.

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.  If you do not own or operate a storage location, you can opt out for this coverage with the State of Illinois.

5. Workers’ Compensation Insurance

Just like any other business, 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.  Many roadside network providers like Agero, Allstate, and AAA require general liability insurance for partner providers.

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 own 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!

Insured ASAP makes it easy to find affordable tow truck insurance in Illinois. We work with various insurance companies to provide the best plans for business owners and independent tow truck drivers. Call us at 800-641-7488 for a free quote from a live representative! You can also use our application form for registration assistance.

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