A Tow Truck Program for Used Car Dealers is a specialized commercial insurance package designed to protect dealerships that use tow trucks as part of their business operations. Whether towing inventory, transporting customer vehicles, or offering roadside assistance, this program helps manage the unique liability exposures and operational hazards associated with tow truck use.
These programs typically combine several types of coverage to address property damage, bodily injury, commercial auto exposure, and garage liability risks that used car dealers commonly face. This insurance is tailored to meet the needs of dealers who own, operate, or contract tow trucks as part of their service offering.
Who needs it
This type of insurance is essential for independent used car dealerships, auto wholesalers, and buy-here-pay-here dealers who use tow trucks regularly. It also benefits operators who repossess vehicles or transport customer-owned vehicles between locations. Businesses with in-house towing units or those that subcontract towing services may also require this protection to reduce third-party liability exposure.
What it typically covers
A typical tow truck insurance program for used car dealers includes:
- Garage liability coverage – Protects against claims from bodily injury or property damage occurring in the course of garage operations.
- Commercial auto coverage – Covers damages to owned tow trucks and liability for at-fault accidents on the road.
- On-hook towing coverage – Provides protection in case a vehicle being towed is damaged while in transit.
- Garagekeepers coverage – Insures customer vehicles stored on your premises in case of fire, theft, or vandalism.
- Property coverage – Optionally covers business buildings, signage, and equipment used in daily operations.
For example, if a dealership's tow truck accidentally damages a customer's car while towing it from a breakdown site, on-hook towing coverage may help cover the repairs.
Common exclusions or limitations
Standard exclusions may include intentional damage, use of vehicles for unauthorized purposes, and claims arising from unlicensed or unapproved drivers. Some policies may limit coverage based on the size or type of tow truck, or exclude specific types of cargo or towing distances. Always review underwriting factors and policy exclusions with your insurance provider.
Factors that influence cost
Insurance premiums for this type of program are typically influenced by factors such as:
- Number and size of tow trucks in your fleet
- Driving records of operators
- Claims history and loss experience
- Annual towing mileage and radius
- Location and risk level of your operations
Underwriters also consider the storage and maintenance practices for both towed vehicles and tow trucks when determining risk levels.
Proof of insurance & compliance
Many states require used car dealers to carry proof of insurance, particularly if they operate tow trucks or provide roadside services. In addition to meeting state licensing requirements, proof of coverage may be requested by lenders, auction houses, or property owners. Having the correct coverage also supports risk management and operational compliance.
How to get a quote
Getting a quote for a Tow Truck Program for Used Car Dealers is simple. Work with a licensed insurance agent who understands the unique needs of auto dealers and towing exposures. Be ready to provide details about your business operations, tow truck fleet, and existing coverage.
Get a quote today to protect your dealership and tow truck operations with tailored coverage.
For related solutions, you may also explore our Used Car Dealers Tow Truck Program or the Auto Body Shop Tow Truck Program for broader fleet and liability protection.
Frequently Asked Questions
Do I need special insurance to tow customer vehicles?
Yes. On-hook towing coverage is essential if you transport customer vehicles, as it protects against damage while in transit.
Can I add multiple tow trucks to one policy?
Most insurance programs allow you to insure an entire fleet under one policy, depending on underwriting guidelines and fleet size.
Does garage liability cover test drives?
Garage liability often provides limited coverage for test drives, but additional endorsements may be needed for full protection.
What if I subcontract my towing?
You may still be liable in some cases. It’s important to ensure subcontractors carry their own insurance and list your dealership as an additional insured when appropriate.
Is this insurance required by law?
Requirements vary by state, but most dealerships with tow trucks must carry minimum levels of liability insurance. Check with your state’s licensing board or insurance advisor.
Still have questions? Talk to a local insurance expert.