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Workers’ compensation helps pay for employees’ covered work injuries and illnesses. For a towing business, that may include medical treatment and partial wage replacement after an injury on a roadside call, at the yard, or in the office.
We help you review coverage for your employees, options for owners, and requirements in customer contracts. Whether you’re hiring your first helper or managing an established fleet, we’ll explain how workers’ compensation fits with your other business insurance.
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What does workers’ compensation cover?
Workers’ compensation provides benefits under state law for covered job injuries and illnesses. Those injuries can happen while a driver secures a vehicle, a helper operates a winch, or an employee works beside traffic.
Benefits may include medical care, rehabilitation, and partial wage replacement. Employers’ liability addresses certain employee-injury lawsuits. We’ll help you review both protections for the states where you work.
Commercial auto and general liability address other risks. Occupational accident insurance has its own benefits and conditions, so check whether a workers’ compensation requirement calls for a separate policy.
Who needs to be included?
Tell us about everyone who works for you, including drivers, helpers, dispatchers, mechanics, office staff, and family employees. Part-time and occasional employees may count toward your state’s coverage requirement.
Review your own coverage as an owner, too. Depending on your business structure and state, you may be included automatically, excluded, or able to choose coverage. Your owner coverage and the business’s obligation to insure employees are separate questions.
What about drivers paid on a 1099?
Paying a driver on a 1099 doesn’t, by itself, settle their workers’ compensation status. State rules consider the working relationship, including who controls the work. Describe your employees and subcontractors when you request coverage.
See the classification guidance from Illinois, Indiana and Wisconsin.
Workers’ compensation requirements by state
The following requirements are a starting point for your coverage review. Your business structure, a valid exemption, or work in another state can affect what you need.
| State | Coverage requirement |
|---|---|
| Illinois | Generally required with one employee, including a part-time employee. Illinois guidance |
| Indiana | Covered employers must maintain insurance or qualify for approved self-insurance; specific exceptions apply. Indiana guidance |
| Ohio | Coverage generally comes through the state fund or approved self-insurance. Ohio requirements |
| Missouri | Generally required with five or more employees; construction employers have a one-employee threshold. Part-time employees and certain owners count. Missouri guidance |
| Texas | Optional for most private employers, with exceptions such as employees working on certain government contracts. Customer contracts may also require it. Texas guidance |
| Wisconsin | Required when you employ three people. A separate trigger applies when combined employee wages reach $500 in a calendar quarter, with coverage due by the tenth day of the first month of the next quarter. Wisconsin guidance |
| Minnesota | Generally required with one employee, including a part-time employee, unless a specific exception applies. Minnesota guidance |
Illinois tow truck registration
Illinois includes workers’ compensation in its tow truck registration checklist. The state’s limited affirmation for a sole proprietor with no other employees applies only to that situation. See the Secretary of State checklist when preparing your documents.
Ohio employers’ liability
If you have employees in Ohio, review employers’ liability, often called stop-gap coverage, separately from state-fund workers’ compensation. A private policy covering employees in other states doesn’t automatically provide Ohio’s primary workers’ compensation coverage.
What do roadside networks require?
A roadside network may ask for proof of workers’ compensation, specific employers’ liability limits, or a waiver of subrogation. Required documents and accepted exemptions vary. See the requirements published by Agero and AAA Club Alliance.
Send us the network’s current insurance instructions. We’ll check your policy and any required endorsements before preparing the certificate.
Owner-only and “ghost” policies
A “ghost policy” is an informal name for a workers’ compensation policy with no covered employees and excluded owners. If you’re an excluded owner, the policy won’t pay workers’ compensation benefits for your own injury.
Availability depends on the insurer and state. If you hire someone or your payroll changes, let us know promptly so we can review the policy.
What affects workers’ compensation cost?
Payroll, job duties, work locations, claims, and owner coverage affect your premium. Describe each employee’s work so the insurer can apply the appropriate classifications for towing, repairs, dispatch, and office duties.
Many policies start with estimated annual payroll. At audit, the insurer compares the estimate with your actual payroll and operations. The difference can result in additional premium or a credit. Keep payroll records and relevant contractor insurance documents organized throughout the year.
Get coverage for your towing employees
Have your business name, ownership information, employee duties, states of work, and estimated annual payroll ready. Include previous coverage and customer requirements. For a new business, tell us who you plan to hire and when.
We’ll help you review available workers’ compensation options alongside your truck and business liability coverage.
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Explore our tow truck insurance overview, new towing business guide and roadside-network insurance requirements.
