Are you thinking of starting a tow truck business in California? A lot of people are starting their own tow truck business as it is a very helpful service all over the world, but tow truck insurance California remains a valuable consideration.
According to ZipRecruiter.com, as of January 2021, the average annual pay that a tow truck owner can get is $88,156 a year. Top earners in this service can make $207,500 a year. The industry is showing signs of more opportunities for advancement.
California is one of the top states where the towing industry is thriving. San Francisco, Fremont, and Santa Clara are identified to be among the top 10 cities where the typical salary for a tow truck owner is above the national average.
With these statistics, starting a tow truck business in California is a good move!
But of course, starting any kind of business is risky. This is why you need to get California tow truck insurance coverage in case something goes wrong.
Besides getting truck insurance, you can also further protect yourself by making sure your business is held as a separate entity from yourself by forming an LLC. That’s easy with a cost-effective online service like ZenBusiness or Incorp.
Is a tow truck covered by insurance?
Yes, there are insurance companies that offer tow truck insurance California policies.
Tow truck owners or operators often find themselves in less than ideal situations in their line of work. They can find themselves rescuing cars in extreme weather conditions, cars that are stuck in heavy traffic, and cars that find themselves in tricky and dangerous situations.
Getting California tow truck insurance will help protect you financially in case an accident happens while you are at work.
Tow truck insurance is a specialized type of commercial truck insurance made to cater to the needs of towing companies.
What insurance is needed for a tow truck?
A tow truck insurance normally includes general liability coverage for personal injury protection and personal and property damage. Your California tow truck insurance policy should include coverage for the following:
Bodily injury liability
This type of tow truck insurance is useful when your tow truck gets involved in an accident and other people are injured. The insurance will help you cover the medical expenses and legal fees in case you get sued.
Medical payments
Your tow truck insurance insurance should include medicals bills for bodily injury that may happen while on the job.
According to the NHTSA, CA tow truck drivers face twice the national average risk when it comes to occupational fatalities and injuries.
Think about it – truck drivers get called out for towing the damaged wreckage of crashed vehicles, as well as facing intense weather conditions.
Property damage liability
This tow truck insurance coverage will be useful when there is physical damage to someone else’s property. Physical damage coverage include the vehicle you are towing and other vehicles involved in an accident.
Uninsured motorist
If your tow truck is involved in an accident and the other driver is not insured or underinsured, this will help cover the cost to you, your drivers, and any passenger in the tow truck at that time. This tow truck insurance also covers hit and run incidents.
Other policies that you should consider aside from a general tow truck insurance
A general liability is usually required by most states for tow truck drivers and owners but you should also consider the following types of coverage:
On-hook towing insurance
This is a specialized policy created for towing companies. This type of tow truck insurance will help pay for the repair or replacement of any damage sustained while the vehicle is being towed or availing your services. It also covers damage caused by accidents, vandalism, theft, and fire.
Cargo coverage
This is another specialized tow truck insurance for towing companies. This tow truck insurance pays for damages sustained on the cargo of the vehicle you are towing.
Garage keepers insurance
This type of tow truck insurance is useful if an accident or damage happens while a vehicle is parked at your lot or garage.
Commercial property insurance
This type of tow truck insurance will help cover your property, equipment, and tools in case they get stolen, need repairs, or need replacements.
Workers compensation insurance
This is insurance that you should get if you have employees doing your services. This policy will protect your employees if they become ill or injured while on the job. In fact, this type of insurance is required in most states.
If you have any employees, you are required by law to have workers compensation insurance in California.
Every business owner is required to carry workers’ comp insurance for employees who regularly work in California, even if the business is based in another state.
It’s possible to get an independent contractor workers’ compensation waiver, but California law presumes anyone who works for an employer to be an employee.
How much does a tow truck insurance cost?
California tow truck insurance rates vary because it will depend on the type of insurance you get and what kind of coverage you are asking for.
Aside from that, there are other factors that the tow truck insurance provider will consider. Here is a list of some factors and information that may affect your tow truck insurance cost:
Your tow truck
The insurance company will need to know what type of tow truck you own and how many trucks you have. Do you own a rollback carrier, under lift wrecker, light single axle, medium-duty axel, heavy-duty axle, or triple axel?
Services provided
The tow truck insurance company will check what kind of services you provide. Are you doing auto-repair, roadside assistance, repossession, impound, or salvage? The hours of your operation may also be factored in the process.
What you tow
Are you towing vehicles only or do you also tow RVs, motor homes, boats, trailers, motorcycles, or heavy equipment?
Security
The tow truck insurance company will have to check if you have implemented some security measures and safety programs. Some states actually require this for towing companies.
Driver qualification
Are you hiring qualified drivers? Some states actually require tow truck drivers to carry a certain class of license or a special certificate.
History
The truck insurance company may check your history for the past three to five years to evaluate if your business is risky or not. If you have a history of getting tickets or causing accidents, this can raise the cost of your tow truck insurance.
How to protect yourself
Safety is a very important factor when it comes to the success of your towing company. Aside from getting tow truck insurance, you should also do some safety measures yourself. Implementing these measures can greatly help lower your liability insurance cost.
Screen your drivers
As the ones operating your tow trucks, you must hire trustworthy and certified tow truck drivers. Make sure that they are more committed to safety than speed. Make sure that your drivers have a clean record to lessen legal liability insurance claims.
Maintain your vehicles
All your tow trucks must be maintained properly for the safety of your driver. This also lessens the risk of property damage. There should be daily checkups on your truck. Make sure that your drivers do vehicle checks before they start hitting the road.
Cameras
Another safety measure that you should consider is to install dashboard cameras on your vehicles. This could be very useful in determining who is at fault in case of accidents.
Be visible
Increasing visibility is another tow truck business safety measure. Make sure that there are reflectors on your tow trucks. You should also require your driver and crew to wear a reflective fluorescent vest so they can be seen as they work.
Know your limits
All tow trucks have a cargo weight limit. You should never go beyond that. Towing something beyond your tow truck’s weight capacity can be dangerous for your driver and other vehicles on the road.
Do you need a special license to drive a tow truck in California?
California tow truck drivers are considered to be professional drivers and are at the same level as drivers holding a special certificate and a commercial driver’s license.
In the state of California, a tow truck driver is required to have a valid Class “A” or “B” commercial driver license and a valid tow truck driver certificate.
You should also know that by state law, California tow truck drivers and owners are required to have California tow truck insurance.
How much does a tow truck typically cost?
Tow trucks are vehicles that are specially designed and equipped to remove and transfer other vehicles in an efficient manner.
The cost of a new tow truck will depend on the type and size of the tow truck that you choose. The costs can vary greatly since even the towing equipment is customized.
A light-duty tow truck will be on the cheaper end while an ultra-heavy-duty tow truck will be on the high-end of the price range. The cost of a typical tow truck can be anywhere from $58,000 to $850,000. Factors that will determine the total cost of a new tow truck include the weight of the tow truck, how much weight it can tow, and the features available.
You can save money if you decide to buy a secondhand truck but even then, the prices will also vary. But this can be risky. You have to consider how well it has been maintained over the years. Take note that the condition of your tow truck will affect the cost of your tow truck insurance.
If the towing tools are still functional, brakes and tires are in good shape, the interior is still looking fine, there are no huge dents, and there are no cracked or broken glass, you may be looking at a good deal. Other things that you should consider when getting a used tow truck is the age of the tow truck and the mileage.
To get the most accurate pricing for tow trucks, it is best to look for trucks for sale in your local area.
Conclusion
Starting a California towing business is a profitable venture but you also have to learn how to deal with the risks it brings.
Don’t rush in your decisions and do comparisons when picking out a California tow truck insurance. Finding the right combination of protection and coverage will take time.
You have to make sure that you will not be paying for something you do not need but you also should make sure that you will not miss out on important coverage. Gather all the information you need to make a smart decision.
California tow truck owners and drivers perform a valuable service to their community. If you own a tow truck business or driving one, tow truck insurance California is a must.