Do you own a repo business? If not, are you thinking of starting one? A repo business can be quite lucrative. However, this line of work comes with a lot of risks. Every time you go on a job, you are at risk. There is the risk of driving and towing the vehicles safely. Also, there is the risk of angry vehicle owners damaging your tow truck. In Los Angeles, a man jumped onto a moving tow truck and smashed the window with a crowbar as his vehicle was being repossessed. Incidents like these show just how important it is to have good insurance coverage. As a tow truck operator, you will need different insurance coverage than other drivers. Here is a breakdown of what is recommended.
Insurance coverage for a repo business.
1. Tow Truck Liability Coverage
Liability coverage for property damage and bodily injury is required by law. It covers damage that you might cause to another person, vehicle, or property. Liability helps you cover your legal obligation to the other driver if you are at-fault in an accident. This coverage will also provide payment for lawyer fees and court costs if you are sued.
2. Physical Damage Coverage
Physical damage coverage will help you get your tow truck repaired following an accident or covered incident. Your physical damage coverage pays out regardless of who is at fault. This insurance typically includes two types of coverage: collision and comprehensive.
Collision coverage covers damage that results from a collision with another vehicle or object.
Comprehensive insurance covers damage from incidents that don’t involve a collision. Examples include:
- Someone steals your tow truck
- Damage from hail
- A tree branch falls onto your truck during a storm
- Animal strikes
3. On-Hook Coverage
On-hook insurance pays for damages to the vehicles that you are towing when they are attached to your truck. If you are towing a car and it is damaged by a collision, on-hook coverage would pay to have it repaired or replaced if the damage is unrepairable.
4. Driveaway Liability Insurance
Driveaway liability insurance is another important coverage for a repo business to consider. This insurance protects you while you are taking a vehicle away. It applies when you locate a vehicle and drive it away to somewhere else. For example, if you locate a vehicle and are driving it away and hit another car, drive away liability would pay for damages to the other vehicle.
5. Medical Payments Insurance
Medical payments insurance is very useful insurance for repossession businesses to have due to the risk inherent with taking possession of others’ vehicles. Let’s say you go to repossess a truck and the owner comes running out of the house just as you are getting inside your tow truck. You start to leave when he runs after you and throws a baseball bat at your truck. You are distracted by his behavior and hit another car. You are injured and cannot work for several weeks. Medical payments insurance would help pay for your medical bills regardless of who is at fault. It would cover ambulance costs, rehabilitation bills, and doctor’s visits.
6. Wrongful repo insurance.
Wrongful repo insurance can help you if you accidentally repossess a car that you’re not supposed to. For example, it can help you if…
- You repossess a car, but the owner made their payment in the time that it took for the request to repossess the car to get to you. You didn’t check to make sure the car still needed to be repossessed.
- You take the wrong car by mistake.
- You don’t have a written notice to repossess the car. (A verbal request is not enough.)
The above insurance coverages are the minimum that we recommend that all repo drivers carry. For more information on insurance for your tow truck, check out our website. All you have to do to get in touch is fill out our online quote form or give us a call.