Managing Rising Towing Insurance Costs
Costs are skyrocketing for everyone. A recent survey of towing operators identified insurance costs, followed closely by inflation, as the biggest contributors to rising expenses. Yet, unlike fuel or equipment upgrades, insurance costs are nearly invisible to your customers—making it difficult to pass these expenses on.
While towing providers have limited options to control insurance costs, there are strategic steps you can take to lower your premiums and improve your risk profile.
Reduce Towing Insurance Costs – Assess Your Risk Profile
Your risk profile plays a critical role in determining your insurance costs. While some factors—such as your location and the types of towing you perform—are fixed, there are key areas where you can make adjustments to reduce risk and lower your premiums.
1. Driver History Matters
Insurance companies look closely at driver history when calculating your premium.
🔹 Problematic driving records—Accidents, traffic violations, and past claims can significantly increase costs.
🔹 Inexperienced drivers—New drivers with no towing experience may be seen as high-risk.
👉 Actionable Tip: Regularly review MVR (Motor Vehicle Records) for all drivers and implement stricter hiring and training protocols to maintain a low-risk fleet.
2. Reevaluate Roadside Assistance Services
Did you know that Roadside Assistance towing carries a higher risk profile than standard light-duty towing?
Frequent stops on busy highways and unpredictable roadside conditions increase exposure to accidents—leading to higher insurance costs.
👉 Actionable Tip: Evaluate the return on investment (ROI) of offering Roadside Assistance services. If the insurance burden outweighs the revenue, it might be time to refocus your business model.
Reduce Towing Insurance Costs –Group Captive Insurance
One of the most effective ways to take control of your insurance costs is by joining a Group Captive Insurance program.
What Is Group Captive Insurance?
Group captive insurance is a self-insurance model where multiple companies form their own insurance entity. Instead of paying premiums to traditional insurers, participants pool resources to collectively manage risk and claims.
How It Works:
✅ Premiums are based on your individual risk profile—not broad industry rates.
✅ Pooled premiums fund claims—unused funds are returned to members rather than an insurance company profiting.
✅ Reinsurance protection—These groups often carry a reinsurance policy to cover catastrophic losses.
Benefits of Group Captive Insurance:
✔ Lower Premiums – Since participants are managing their own risk, costs are often significantly lower than traditional insurance.
✔ Greater Transparency – You gain insight into where your premiums are going and how claims are managed.
✔ More Control – Instead of an insurer dictating costs, you have a say in premium structures and claims processing.
✔ Profit Sharing – Unlike standard insurance, any unused premiums come back to the members—instead of padding an insurance company’s bottom line.
Potential Risks to Consider:
While Group Captive Insurance offers control and cost savings, it does come with a higher degree of shared responsibility.
🚨 No large insurance company backing – If multiple members in the group face large claims, it can impact everyone’s premiums.
🚨 Financial stability is key – Members must maintain strong financials to sustain the pool.
👉 The good news? Reinsurance policies are in place to mitigate catastrophic risks, ensuring financial protection against large-scale claims.
Plan for a More Profitable 2025
By taking proactive steps—from better driver screening to exploring alternative insurance options like Group Captive Insurance—you can gain greater control over rising costs and protect your business’s bottom line.
At Towing Forward Company, we are not affiliated with any insurance group and **doCosts are exploding for everyone. A recent survey of towing operators indicated insurance costs, followed by inflation, as the biggest driver of increased costs. It is hard to pass these costs on as your customer does not see a difference.
Towing providers have few options to control their insurance costs, but there are things you can do.
Wanna learn other ways to improve your business? Contact us at 760 519-2230 or click here .
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Towing Forward Company is not affiliated with any insurance group and does not receive any compensation for your clicking on the above links.