Do you need car insurance to be towed?

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Things to Remember...

  • Vehicles that are registered to be driven must be covered by continuous auto insurance as legally required in the state
  • Liability coverage will extend from the vehicle doing the towing to the vehicle in tow when each are owned by the same person
  • The policy on the lead vehicle doing the towing will not cover physical damage claims on the vehicle being towed
  • If the vehicle in tow is damaged in an accident, it must have its own policy with collision coverage for repairs to be paid under insurance
  • In most cases, if a third-party liability claim is filed it will go against the lead car because most accidents are caused by the driver’s negligence

Every state has its own car towing requirements and restrictions that operators should be aware of before leaving home.

If you’re planning to have a vehicle towed to storage or you’re traveling cross country to your new home, it’s important that you verify that you have the appropriate insurance on both the lead car and the car in tow.

Having insurance isn’t just a law, it’s also a financial lifesaver that can protect you from drowning in debt after a loss.

While you don’t need coverage on the vehicle being towed in all scenarios, it’s crucial in many. Read on and learn how insurance extends from the lead car to the towed car and how it doesn’t.

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How do auto insurance coverages extend to vehicles in tow?

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Auto insurance policies have clauses written into them that specifically cover scenarios where damages are caused in conjunction with towing a vehicle.

Within the policy on the lead car, it does afford some coverage that will pay for losses that occur while cars or trailers are being towed.

Unfortunately, whether or not your loss will be covered isn’t so cut and dry. It all depends on the type of claim, how the car’s being towed, and the cause of the claim.

Because of these factors, you’ll need to take a look at your policy before you hit the road with a trailer or tow hitch connected to your vehicle.

Are there restrictions for the types of trailers covered?

Not all trailers will be covered in tow under a standard contract.

It’s important to review terms and conditions so that you know what types of trailers are afforded coverage while it’s being pulled by the insured vehicle.

Here are some restrictions written into a majority of auto policy forms:

  • Trailers must be owned by the same registered owner of the lead car
  • Utility trailers carrying cars and pleasure crafts may be covered for liability
  • Travel trailers will be covered for liability coverage when it’s towed
  • Rented trailers will not be covered under personal auto insurance

How does liability insurance extend in a towing scenario?

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If you’re in the midst of a tow, it’s important that you know how your liability coverage works. For third-party liability claims, most standard personal auto policies will extend liability coverage to the towed car.

This liability coverage will come from the lead car that the towing hitch or the trailer is connected to.

In a scenario where the car in tow careens off the road or veers into another car, the damages that are caused to third-party vehicles and other forms of real property will be covered under the lead car’s property damage liability limits.

If there are also third-party injuries, the lead car’s bodily injury liability coverage will pay up to the per person and per accident limits.

Typically, the driver’s actions and negligence are what will cause the accident even if the towed car is what collided in the end.

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How does property damage coverage extend in towing scenarios?

If a towed vehicle collides with another vehicle, you’ll have two separate claims to file.

One claim will be under the lead car’s liability insurance for damages and injuries that a third party sustains and the other will be under the towed car’s policy for damages.

Unfortunately, many people aren’t aware that car towing scenarios only extend liability coverage to the trailer and not physical damage coverage.

This lack of total coverage is true even when the lead car has a full coverage plan. For the damages to the property to be covered by insurance, the car will need its own collision coverage.

Does extended liability coverage satisfy state insurance requirements?

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You don’t necessarily always need to have a standalone car insurance policy on a towed vehicle, but in some scenarios, it’s a must.

If the vehicle is operable and it’s currently registered in a state that has mandatory auto insurance laws, you can’t rely on the lead car’s liability coverage to satisfy these laws for you.

As long as the vehicle is registered to be driven, it will need no less than a minimum amount of liability coverage in all scenarios.

What happens if the vehicle is being leased or financed?

If you’re towing a vehicle that’s currently under a lease or lending contract, you’ll need to purchase a full coverage policy on the car that covers it when it’s being driven and when it’s being towed.

It’s your responsibility as a borrower to protect the collateral on the loan and allowing the policy to cancel could affect your loan balance.

It’s also important that you have the collision coverage if something were to happen to the asset while it was in transit.

What if the car is being towed by a company?

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If you aren’t towing the car, it’s an entirely different scenario. Since you don’t own the lead car, you’ll need to be in contact with the company owner to discuss the types of commercial liability coverage they carry.

Technically, when a company that tows cars damages your car while it’s in their possession it’s their responsibility to pay for repairs.

Luckily, if you have collision coverage, you may be able to get repairs done while you’re working things out with the guilty party. Your carrier may even handle subrogation to recover the money they’ve paid out.

If you’re gearing up for a cross-country trip or you’re taking your classic car to the shop, it’s time to shop for insurance. Be sure that you comply with the state laws where the vehicle is registered to avoid hefty penalties.

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