The Role of Insurance In Towing Truck Company Regulations

Q: What insurance does California law actually require for tow trucks?

California law requires auto liability, on-hook towing, and garagekeepers coverage at a minimum, plus workers’ compensation if you have employees.

Q: Why does my policy feel like a recurrent uphill climb in cost?

Insurers have raised rates dramatically, with some accounts seeing 100–150% increases despite having no claims history.

Q: Does hauling in urban areas or near hillsides cost more to insure?

Yes. Higher traffic, greater risks, and proximity to hazardous areas like hillsides increase insurance premiums.

Q: How many carriers actually offer tow truck insurance in CA?

There are only about ten insurance carriers left actively offering tow truck insurance in California due to the industry’s high risks.

Q: What can I do to bring insurance costs down?

To lower costs, implement regular safety training, hire experienced drivers, review policies annually, and work with a specialized insurance broker.

By Infinite | August 26, 2025

Tow truck insurance isn’t just a legal formality in California; it’s the lifeline that keeps your tow truck business compliant, operational, and protected. Without the right blend of liability, on-hook, garagekeepers, physical damage, and workers’ compensation policies, you risk fines, permit denials, lawsuits, and financial ruin.

Why Insurance Is the Anchor in CA Towing Regulations

In California, running a towing business is not a license to roam; instead, regulators require that you reserve safe passage. Proof of insurance is required by the DMV, CHP rotational programs, and local authorities. Your permit or your business could disappear overnight if you make a mistake.

Required Tow Truck Insurance Coverage in California

Type of Coverage	What It Covers	California Requirement / Industry Standard
Auto Liability Insurance	Bodily injury and property damage caused by your tow truck	Required by CA law; Minimum liability limits vary by truck size and operation (e.g., $750,000 – $1,000,000+)
On-Hook Towing Insurance	Customer’s vehicle while being towed	Not state-mandated, but required by many contracts and CHP rotation programs
Garagekeepers Legal Liability	Customer vehicles stored at your yard or repair facility	Not mandatory statewide, but essential for compliance & contracts
Workers’ Compensation	Medical expenses and lost wages for injured employees	Required by CA law if you employ drivers or staff
Physical Damage Coverage	Collision, theft, fire, vandalism for your tow truck itself	Optional, but strongly recommended—many lenders/lessors require it
General Liability	Injuries or damages not directly tied to vehicle operation (e.g., slips at the yard)	Not legally required, but often needed for contracts & lawsuits defense

Why Tow Truck Insurance Isn’t Optional

Let’s bring in some cold, hard data to understand why insurance isn’t optional.

In California alone, there are 5,096 towing businesses, growing about 4.8% annually, with over 17,000 employees backing operations. (Source: IBISWorld)
Across the U.S., there are roughly 43,800 towing businesses employing 97,900 people. The industry grew to $10.3 billion in 2023, increasing by around 4.1% annually.
(Source: Lookup A Plate)
This industry also features one of the highest fatality rates among the private sectors, with 44 deaths per 100,000 workers, which is 15 times the U.S. average of 2.9. (Source: Lookup A Plate)
And get this: AAA reports a tow truck driver dies every six days. That’s six in just eight days in one report. It’s a stark indicator of the hazards any policy must protect against. (Source: reliancepartners.com)

Your operating costs are not tiny either. Insureon reports the median costs for key policies run around $737/month for commercial auto, $58/month for general liability, and $650/month for workers’ comp. (Source: Insureon)

What Drives Those Premiums Up?

Several variables affect how much you're going to pay:

Location: In urban areas, high-traffic zones, and natural disaster zones, such as wildfire or earthquake regions, expect higher rates.
Driver History & Experience: Clean DMV records and seasoned drivers mean lower premiums.
Equipment Age and Type: Newer, safer trucks may cost less to insure. Surprisingly, older trucks can spike your rates.
Claims History & Coverage Breadth: More claims or wider coverage usually means bigger premiums.
Insurance Market Tightness: Many carriers have pulled out of this space. One expert estimates only around 10 insurers remain willing to write tow truck business.

Endnote

Tow truck insurance in California is not a nice-to-have; it’s your operational backbone. With booming business numbers, rising risks, and scarce insurance availability, you're not just buying policies; you're investing in business resilience. Keep your team safe, your trucks covered, and your business rolling.

Need assistance?
Contact e360 Insurance Services.