Have you been searching for tow truck insurance in Illinois and noticed that premiums have skyrocketed in the past year or two? You’re not alone. Many tow truck operators in Illinois are experiencing premium increases of 2x to 4x what they were paying before. If you’re looking for cheap tow truck insurance or trying to understand why rates are rising, this guide will explain the key factors behind the price hikes and offer tips for finding affordable coverage.
Why Have Tow Truck Insurance Rates Increased in the Last 1-2 Years?
Tow truck insurance in Illinois has seen sharp increases over the past couple of years. While several factors contribute to these rising costs, understanding why insurance premiums have spiked can help you make informed decisions about your coverage and expenses.
1. Rising Repair and Replacement Costs
The cost of repairing or replacing vehicles, including tow trucks and the vehicles you’re towing, has increased significantly. Supply chain issues caused by the pandemic have slowed the production of vehicle parts and new trucks, making repairs more expensive. Additionally, the global semiconductor shortage has delayed car manufacturing, further driving up costs. Insurers have to raise premiums to cover these rising repair and replacement expenses.
2. Medical and Liability Costs Are Growing
Medical expenses have also surged, contributing to higher liability insurance premiums. Tow truck accidents often result in injuries, and medical costs are rising across the board. As healthcare expenses increase, so do the potential costs of accidents and lawsuits, leading insurance companies to raise rates to manage their risk.
3. Inflation and Increased Operating Costs
General inflation is another major factor driving up tow truck insurance rates. As the cost of materials, labor, and everyday goods rises, tow truck operators face higher operational costs. From fuel prices to vehicle maintenance, businesses are paying more to stay in business — and insurers are raising premiums to match.
4. Higher Accident Frequency and Severity
The past couple of years have seen more traffic on the roads, which has led to an increase in accidents. Tow trucks, which play a critical role in clearing the roads after accidents, are at higher risk of being involved in claims. The rising frequency of accidents means more claims and higher settlement costs, which pushes insurance rates up for tow truck operators.
5. Reinsurance Costs for Insurers Have Increased
Insurance companies often buy reinsurance to protect themselves from large claims. With rising claims from accidents, weather events, and medical costs, reinsurance premiums have increased. To offset these higher costs, insurance companies pass the burden onto policyholders by raising their premiums.
6. Rising Fraud and Staged Accidents
Insurance fraud, particularly staged accidents involving tow trucks, has become a more significant issue in recent years. Fraudulent claims add to insurers’ risk exposure, leading them to raise premiums to cover potential losses. As more staged accidents occur, insurance costs across the industry increase.
7. Regulatory Changes in Illinois
Changes in state laws or regulations in Illinois may also play a role in increasing insurance premiums. For example, new or higher mandatory coverage limits can force insurers to raise rates to comply with these requirements. Additionally, stricter regulations around claims handling or the scope of coverage may contribute to higher insurance costs.
Tow Truck Insurance Costs: What to Expect in Illinois
Tow truck insurance premiums vary widely depending on factors like the size of your business, the type of tow truck you own, your driving history, and the level of coverage you need. Below is a general breakdown of what you might pay for tow truck insurance in Illinois:
Average Tow Truck Insurance Costs
In late 2024 and into 2025, the median monthly cost for tow truck insurance in the state of Illinois is $380 per month for basic tow truck insurance to meet Illinois’ minimum limits for tow truck registration ($500,000 CSL liability & $25,000 on-hook coverage.)
For towing companies regulated by the ICC who require higher limits of insurance ($750,000 CSL liability & $25,000 on-hook coverage), average monthly costs for tow truck insurance are $620 per month per truck.
Finally, tow truck companies in Illinois who must register with the DOT, and require $1m CSL liability, costs for tow truck insurance increase to $815 per truck per month.
Read more about Tow Truck Insurance Requirements in Illinois
Finding Affordable Tow Truck Insurance in Illinois
While insurance costs are on the rise, there are still ways to find affordable tow truck insurance in Illinois:
- Shop Around and Compare Quotes: Different insurance companies have different pricing structures. By comparing multiple quotes, you can find the most affordable policy that meets your needs.
- Bundle Your Coverage: Many insurers offer discounts if you bundle different types of insurance, such as general liability, physical damage, and cargo insurance. Bundling policies can help lower your overall premium.
- Increase Your Deductible: If you’re able to pay a higher deductible in the event of a claim, you can lower your premium. However, be sure you can afford the out-of-pocket costs if something goes wrong.
- Improve Safety and Driver Training: Tow truck companies that invest in safety programs or driver training can often qualify for lower premiums. Reducing the number of accidents and claims will make you less of a risk for insurers.
- Choose the Right Coverage: Only purchase the coverage you actually need. Review your business’s specific risks and choose a policy that offers adequate protection without overpaying for unnecessary coverage.
- Consider a Higher-Volume Fleet: If you operate more than one tow truck, you might receive discounts for insuring multiple vehicles under one policy. This is known as fleet insurance and can save you money on premiums.
Conclusion: Why Tow Truck Insurance Is Increasing and How to Keep Costs Down
The increase in tow truck insurance premiums in Illinois can be attributed to a combination of factors, including rising repair costs, medical expenses, inflation, and more frequent accidents. While insurance costs are rising, there are ways to find affordable coverage if you shop around, compare quotes, and choose the right coverage for your needs.
If you’ve seen your premiums skyrocket, it’s a good idea to speak with an insurance broker or agent who specializes in commercial or tow truck insurance. They can help you navigate the changing insurance landscape and ensure you get the best possible deal.
