Most of the insurance companies that offer coverage to towing operations offer the garage- keepers coverage on a legal liability form. Garage-keepers coverage is purchased to cover the non-owned vehicles that are in the care, custody, and control of the towing operations. This coverage will exclude vehicle that are being towed since there is additional coverage called on hook coverage available for that.
There are two types of garage-keepers coverage that are available. It can be purchased on a legal liability bases or direct primary. Almost all policies that are written are done as legal liability protections. What this means is that the vehicles will be covered in the event that the insured is negligent in some way making them legally liable for damage or theft of the non-owned vehicles.
A good example of insured negligence would be if the business owner or employee had left the lot for the day. If while leaving the storage lot they had forgotten to lock the gate behind them and somebody had damaged one of the vehicles that they were storing. This would be considered a neglect issue by the insured causing them to be legally liable for the damages that we caused to the vehicle owner.
Many times this is not the case. Often vehicles that are damaged or stolen from towing yards are done so be no neglect on the part of the insured. Having legal liability protection in place on the tow truck insurance policy would not cover the vehicles that are damaged or stolen with no negligence by the insured. The customer would need to submit the claim to their own insurance company and request for them to cover the claim.
Direct primary coverage is available for tow truck business owners. This coverage would pay out for vehicles that are in their care, custody, and control even without negligence on behalf of the insured.