Commercial truck insurance • Towing
Tow Truck Insurance: On-Hook, Garagekeepers, and What Towing Businesses Need
Tow truck insurance is a package built around the risks of moving other people’s vehicles: commercial auto liability for your wrecker, on-hook coverage for a customer’s car while it’s being towed or hauled, and garagekeepers coverage for vehicles stored in your lot. Most towing businesses also need general liability, physical damage, and workers’ comp.
This guide explains each coverage, how on-hook differs from garagekeepers, and the federal CDL rules for tow truck drivers.
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Coverage towing businesses need
| Coverage | What it covers |
|---|---|
| Commercial auto liability | Injury and damage you cause to others while driving your tow trucks |
| On-hook towing | Damage to a customer’s vehicle while it’s being towed or hauled, from collision, fire, theft, explosion, or vandalism |
| Garagekeepers | Customer vehicles in your care, custody, or control, such as in your storage lot |
| Physical damage | Repairs to your own tow trucks |
| General liability | Non-auto claims, such as a customer injured at your yard |
| Workers’ compensation | Employee injuries, required in most states once you have employees |
On-hook vs. garagekeepers
On-hook coverage pays to repair or replace a vehicle you don’t own if it’s damaged while you tow or haul it. You choose a per-occurrence limit and deductible, and some insurers require every towing vehicle on the policy to carry the same on-hook limit (Progressive Commercial: on-hook towing). Garagekeepers protects customer vehicles while they sit in your lot or shop. Policy names differ by insurer and state; in Texas and Virginia, for example, Progressive calls its on-hook coverage “garagekeepers legal liability,” so read the coverage description, not just the title.
CDL rules for tow truck drivers
FMCSA treats a tow truck and the vehicle it tows like any powered unit towing a non-powered unit (FMCSA: CDL groups for tow trucks):
- Class A if the combination is rated 26,001 pounds or more and the towed vehicle is rated over 10,000 pounds.
- Class B if the tow truck alone is rated 26,001 pounds or more and tows 10,000 pounds or less.
- Class C rules can apply when towing a vehicle that must be placarded for hazardous materials on a later move.
Other requirements to check
- Police rotation lists, motor clubs, and cities often set their own minimum limits for tow operators.
- Towing that crosses state lines can bring FMCSA registration and insurance rules; see FMCSA insurance requirements.
- Some states license towing companies or regulate storage and nonconsensual tows; check your state’s rules.
Example claims
- A customer’s car slips off the wheel lift and is damaged in transit: on-hook coverage.
- A car stored in your lot is vandalized overnight: garagekeepers.
- Your tow truck hits another vehicle on the way to a call: commercial auto liability.
- A driver is hurt while hooking up a car on the shoulder: workers’ compensation.
Police rotation lists and motor club contracts
Police and municipal rotation lists, motor clubs, and roadside assistance programs often set their own insurance requirements, such as minimum liability limits, on-hook limits, and proof of workers’ comp. Get each contract’s requirements in writing before you buy, so your policy and certificates match.
How towing companies can keep costs down
- Hire drivers with clean records and run regular motor vehicle record checks.
- Train drivers on roadside safety and securing vehicles.
- Photograph vehicles before hooking up to document existing damage.
- Secure your storage lot with lighting, fencing, and cameras.
Customer vehicles: garage liability vs. garagekeepers
Garage liability excludes customer vehicles in your care, custody or control, according to Insurance Journal. That's the core gap for towing and storage operations. A car damaged on your hook or in your lot isn't covered by liability alone.
Garagekeepers coverage fills it. It comes in three forms:
- Legal liability: pays only when you're negligent. This is the most common option.
- Direct primary: pays regardless of fault, such as weather or theft.
- Direct excess: pays regardless of fault, but only after the owner's own insurance. This is the rarest option.
If you run an impound lot, a hailstorm or break-in can damage dozens of cars at once. Legal liability may not pay for that, since no negligence is involved.
When FMCSA rules reach a tow truck
FMCSA safety regulations generally apply to vehicles with a gross vehicle or combination weight rating of 10,001 lbs or more. Check your truck's rating, and any combination rating, against that line.
For-hire carriers of non-hazardous property in interstate commerce must carry minimum public liability under 49 CFR 387.303:
- $300,000 if the vehicle is under 10,001 lbs
- $750,000 at 10,001 lbs or more
An MCS-90 endorsement is also required. Whether a given towing operation counts as interstate for-hire carriage depends on the facts, such as where tows start and end. Check before you assume it does or doesn't.
Intrastate minimums can be higher
States set their own rules for trucks that stay in-state. Texas is one example. The Texas Department of Motor Vehicles sets a $500,000 minimum for intrastate carriers over 26,000 lbs, according to its 2019 guide. TxDMV also requires a USDOT number before its own registration.
Many cities and states license towing operators separately. Ask each licensing agency what proof it requires, and what limits, before you apply.
Sources for the sections above: Insurance Journal, Garagekeepers coverage, 2014 (secondary); FMCSA FAQ, Am I subject to FMCSA safety regulations?; FMCSA, Insurance requirements; TxDMV, Tips for compliant operations as a Texas intrastate motor carrier, 2019.
Tow truck insurance FAQs
What insurance does a tow truck business need?
Commercial auto liability, on-hook coverage for vehicles you tow, garagekeepers for vehicles in your lot, physical damage, general liability, and workers’ comp if you have employees.
What is on-hook towing insurance?
Coverage that pays to repair or replace a customer’s vehicle damaged while you tow or haul it.
What is the difference between on-hook and garagekeepers?
On-hook covers vehicles while they are being towed; garagekeepers covers customer vehicles stored in your lot or shop.
Do tow truck drivers need a CDL?
It depends on weight ratings. A Class A is required when the combination is 26,001 pounds or more and the towed vehicle is over 10,000 pounds.
Do police rotation lists require extra insurance?
Often yes. Many set minimum liability and on-hook limits and require proof of workers’ comp.
How can I prove damage existed before I towed a car?
Photograph the vehicle from all sides before hookup and note existing damage on the tow ticket.
Related guides
Important information
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Independent agency. Blake Insurance Group LLC is an independent insurance agency. Licensed insurance producer NPN 16944666. Licensed states: AZ, AL, TX, CA, NY, OH, FL, NC, VA, GA, OK, NM, IA, KS, MI, NE, SC, SD, WV, IL, NJ, PA, TN, and WA. Which insurance companies we can quote depends on our current appointments, the product, and your state. Mentioning a company on this page does not mean we represent it.
Legal requirements. State and federal requirements summarized here are general information as of November 2026 and can change. This page is not legal advice; confirm current rules with the FMCSA and your state’s motor carrier agency.
Availability. Coverage, prices, discounts, and eligibility vary by insurer, state, and applicant, and are subject to underwriting. The issued policy controls.
Your next step
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