Tow Truck and Wrecker Insurance: Liability, On-Hook and Garagekeepers
You hauled a customer's car to the lot, it was damaged on the hook, and now you are reading your policy to find out whether it pays. Tow operators run into this because a wrecker carries three different exposures at once: the truck on the road, the vehicle behind it, and every vehicle sitting on your lot overnight. Each one is covered by a different part of the program, and the federal rules only touch the first.
A tow truck on interstate runs is a commercial motor vehicle once the weight rating, or the combined weight with the vehicle it tows, reaches 10,001 pounds, and 49 CFR 387.9 sets a $750,000 liability minimum for for-hire carriers of nonhazardous property at that weight. Coverage for customers' vehicles, on the hook or on your lot, is a separate part of the program. A DOT number and your renewal month is enough to start.
When federal rules apply to a wrecker
The definition in 49 CFR 390.5 does not single out tow trucks. It covers any self-propelled or towed motor vehicle used on a highway in interstate commerce to transport property or passengers that has a gross vehicle weight rating or gross combination weight rating, or a gross vehicle weight or gross combination weight, of 4,536 kilograms (10,001 pounds) or more, whichever is greater. A wrecker is a self-propelled vehicle that carries or pulls another vehicle, so the weight of the combination counts, and the heavier figure controls.
The exemptions in 49 CFR 390.3(f) cover school buses, transportation by federal, state or local government, occasional personal hauling not for compensation, transport of human corpses or sick and injured persons, fire trucks and rescue vehicles in emergencies, certain small passenger vehicles and some propane and pipeline emergency work. Tow trucks and wreckers are not mentioned there. So a private tow company running a heavy wrecker across state lines should assume the rules apply until FMCSA says otherwise, because assuming the opposite is what leaves a tow business without the coverage a roadside inspection looks for.
Many tow jobs stay inside one state, and then state rules matter more than federal ones. The interstate definition is wider than a trip across a line: it includes a trip between two places in a state that passes through another state, and a trip within a state that is part of a movement that began or ends outside it. A recovery on a highway that is part of a longer interstate move can count, so ask about the rule for your actual runs and not just your home state.
The liability minimum and the proof
For a for-hire carrier in interstate commerce hauling nonhazardous property with a vehicle rated at 10,001 pounds or more, the table in 49 CFR 387.9 sets a minimum of $750,000. Section 387.7(a) says no motor carrier may operate a motor vehicle until it has obtained, and has in effect, those minimums, and 387.7(b)(1) says the policies must stay in effect continuously until terminated. Proof can be an MCS-90 endorsement issued by an insurer, an MCS-82 surety bond, or FMCSA authorization to self-insure.
The insurance company that writes the policy sends FMCSA the filing. The team that services the policy issues certificates and endorsements. You do not file either one yourself, but you do need to know the endorsement is on your policy, since a motor club, a municipality or a body shop may ask to see proof. Our MCS-90 explainer covers what it is.
The coverages in a tow program
The federal minimum is one line in a longer program. These are the coverages a tow operation usually weighs, and each answers a different loss:
- Auto liability covers injury and damage you cause to other people while the wrecker is on the road. It is the coverage the federal minimum applies to.
- On-hook coverage is generally written for a customer's vehicle while it is hooked to, or loaded on, your wrecker. The damage that prompted the story at the top of this page is the kind of loss it is meant for.
- Garagekeepers coverage is generally written for customer vehicles while they sit on your lot or in your care, for example a car held overnight or a vehicle stored after a recovery.
- Physical damage covers your own wrecker and equipment. If a lender holds the truck, the lender will want it, because the truck is the collateral. Our physical damage guide explains how it works for heavy equipment.
- General liability covers claims that come from your premises and operations away from the road, such as a customer who is hurt on your lot.
- Workers' compensation applies to employees, and drivers on a tow team count. Rules vary by state.
Policy wording on these varies. Two forms that carry the same name can treat towing, storage or a vehicle that has been in a crash differently, so read the form and ask what it covers before a loss, not after it.
Where tow operators find gaps
Most gaps come from a mismatch between how the business works and what the policy describes. A few examples worth checking against your own operation:
- Light-duty, heavy-duty and rotator trucks are different exposures, because the weight of what you pull changes the loss. Tell the insurer which you run.
- Vehicles on your lot may be there for a day or a month. A policy written around short storage can leave a long hold uncovered, so say how long vehicles stay.
- Work for a motor club or a police rotation often comes with its own insurance requirements. Ask for those in writing before you sign up, because the contract limit can sit above the federal one.
- A driver who is not on the policy can leave a loss unpaid. List every driver, because the underwriter prices the drivers it knows about.
Waiting has a cost you can name. A claim denied because the coverage did not match the work is paid out of the business, and a policy that lapses can leave you without the coverage 387.7 requires while you are still running calls.
What an insurer reads first
An underwriter reads your FMCSA record if you have a DOT number: your inspections, your out-of-service history, your crash record and how long you have been operating. It also reads your own description of the work, such as how many trucks you run, how far you go, what your drivers' records look like and how you store vehicles. When we review a file, we start there, before we quote, so the quote matches the business that exists and not the one a form suggests. Our owner-operator insurance requirements guide covers the basics for a single-truck operation.
Five steps before you renew or start
- List each wrecker with its weight rating, because the 10,001-pound test starts there.
- Write down your longest regular run and whether it crosses a state line, because that decides whether federal rules apply.
- Ask what your policy says about a customer's vehicle on the hook and on your lot, because those are two different coverages.
- Ask for any contract insurance requirements before you sign, because they can be higher than the federal floor.
- Have your DOT number and renewal month ready, because that is all the file review needs to begin.
What this guide does not cover
- It does not set out state rules, which differ for intrastate towing.
- It does not quote policy language. Forms differ by insurer, so the coverage descriptions above are general.
- It does not give prices. Those depend on your equipment, drivers and record.