The commercial insurance industry in California is one of the fastest changing insurance industries in the United States. Insurance companies are continuously merging and acquiring other companies. Insurance companies are changing their target markets as these mergers and acquisitions take place. With the combination of these changes and other insurance companies broadening their guidelines in an attempt to grow their business the insurance rates available to the tow truck industry have been changing as well.
When an insurance company initially begins to accept new classes of business their rates are determined without a clear long history of the losses associated with the new businesses that they are insuring. Many of the insurance companies that are trying to broaden the types of businesses that they will insure have begun to write insurance policies with premiums that are very competitive. Frequently the premiums assigned are too low for the risks that are being insured. The insurance companies find themselves in a position that they are actually paying out more in claims than they are collecting in premium.
While these insurance companies are offering very low rates compared to their competition they get a large volume of business. Many of the tow truck business owners had recently changed their tow truck insurance policies so that they could receive the great rates as well.
Unfortunately, with the increase in rates from many of the carriers that a recently began to insure tow truck operations and the new rates that have come from other insurance companies merging together many tow truck business owners have been forced to find new insurance companies. Often the insurance rates have been adjusted many business owners had received renewal offers that almost doubled the amount of the prior term. These business owners were left with no option but to shop their tow truck insurance policies with other carriers in an attempt to find a more competitive rate.