On Hook Insurance is a type of commercial insurance used by tow trucks ("wreckers"). State laws and insurance companies policy terms may differ however on-hook towing insurance will normally pay to repair or replace a vehicle you (the towing company or policyholder) do not own if it is damaged by a collision, fire, theft, explosion or vandalism while you are towing or hauling.
Companies that offer towing services need on-hook towing insurance to protect their business while their wreckers are hauling vehicles owned by a customer or someone else.
An example of when on-hook coverages could come into play is if you are towing a customer's vehicle and at a stop light some rowdy teens on a corner throw rocks through the windows of the vehicle and run over and slash the tires. You are unable to catch the vandals so you would place a claim through your on-hook insurance coverage to repair the customer's vehicle, minus the deductible you would pay out.
With On Hook Towing insurance polices the policyholder will need to select both a limit and a deductible. The limit is the maximum total amount paid per occurrence for damage done to all vehicles. The deductible is the amount the policyholder will pay out of pocket per occurrence for repairs or replacement of the damaged vehicle before their insurance policy kicks in and pays out.
On Hook towing insurance policies will normally have both exceptions and restrictions. For example one commercial insurance provider (Progressive) has the following exceptions and restrictions for their on-hook towing insurance:
You must purchase liability insurance to be eligible for On Hook Towing insurance.
If one towing vehicle has On Hook Towing insurance, all towing vehicles insured on the same policy must have On Hook Towing insurance with the same limits.
With many commercial insurance providers On Hook Towing insurance is only available for the following business types:
- Towing or service station services
- Trucking for hire, when hauling vehicles not owned by the insured
On Hook Towing insurance is only available for towing certain vehicle types. On-hook towing policies can exclude many types of vehicle; usually this type of coverage is not available for:
- Towing your car behind your mobile home
- Transporting your own vehicles or vehicles owned by your business
- Towing antique cars, race cars or boats for personal use
Be aware that in the states of Texas and Virginia on-hook towing insurance is called Garage Keeper's Legal Liability insurance. These two states also refer to what is normally called Garage Keeper's Legal Liability insurance as Storage Location insurance.
Garage Keeper's Legal Liability coverage in most states is an optional coverage designed to provide protection for business owners who offer towing services or operate service stations. It protects a customer's vehicle when you are keeping it at a covered location for parking or storing, or to perform service.
With this type of policy a policyholder must select limits which will determine the maximum amount of coverage available to you on a per-occurrence basis. Whether it is one car or a garage full of cars that is damaged while in your care, the total amount covered by Garage Keeper's insurance is based on the limit you choose. You can select from a variety of options depending on your state, but the typical maximum available limit is $2,500 per occurrence.
Garage Keeper's Legal Liability policy requires you to select a per-vehicle deductible, which is typically $500. This means you would pay the first $500 to repair or replace each vehicle, and your insurance company would pay the remainder up to the limits of your policy.
There are also exceptions and restrictions to a garage keeper's liability policy. These normally include if you have more than one storage location, each location must be listed and documented separately and will be issued its own insurance. Also one must purchase Liability insurance and On Hook Towing insurance to obtain Garage Keeper's Legal Liability coverage.
State and even city insurance requirements for towing companies can differ so find out what your area requires, especially if you want your towing business used by police for tows that need require.
For example a town in North Carolina has the following as the minimum insurance requirements to be kept and maintained by wrecker owners at all times:
A Garage and On The Hook (towing) Liability Policy is mandated. A garage and on hook (towing) liability policy covering the operation of the business equipment, or other vehicles for any bodily injury or property damage is required. This policy shall be in the amount of $50,000 for each small wrecker and $150,000 for each large wrecker. In addition, each wrecker shall have a garage keeper insurance policy from an insurance company authorized to do business in the state of North Carolina covering towed vehicles in the amount of $100,000.
A town in South Dakota requires wreckers to have the following limits if they wish to be used by police to tow vehicles:
Liability insurance in an amount not less than $100,000 and vehicle insurance in an amount not less than $100,000 per person and $300,000 per accident is required. Vendor verification of the required insurance coverage must be submitted with the request for authorization and annually thereafter.
Remember that policies coverages and exclusions for these types of auto insurance, on-hook and garage keeper's, will defer depending upon the state laws, the commercial insurance provider, their guidelines and the specific terms of the policy.