The short version
- Texas sets tow truck insurance by permit type: incident management towing needs at least $500,000 liability and $50,000 cargo per truck, private property towing $300,000 and $50,000, and consent towing $300,000 liability.
- The cargo requirement is met with on-hook coverage, which pays for damage to the vehicle you are towing; garagekeepers covers customer vehicles once they are parked at your lot.
- TDLR requires an electronic certificate of insurance from a Texas-authorized insurer, matching the permit name and address, with 30 days' notice to the department before cancellation; evidence of insurance must ride in each permitted truck.
- A licensed vehicle storage facility has its own TDLR insurance minimum per claim, scaled to capacity: $9,000 up to 50 vehicles, $18,000 for 51 to 99, and $25,000 for 100 or more.
Who this page is for
This page is for Texas towing companies: light-duty wreckers and rollbacks, medium and heavy-duty wreckers and rotators, police rotation and incident management towing, private property (parking enforcement) towing, motor club and consent towing, and companies that also run a vehicle storage facility (VSF).
Texas regulates towing through the Texas Department of Licensing and Regulation (TDLR) under Occupations Code chapter 2308 and 16 TAC chapter 86. Under 2308.151, a person may not perform towing operations or operate a towing company without the appropriate license. Each tow truck needs a permit for the type of towing it does, and each permit carries an insurance requirement.
TDLR insurance minimums by permit type
The minimums are set in Occupations Code 2308.103 through 2308.105 and 16 TAC 86.400, and they apply per tow truck. A truck permitted for incident management may also do private property and consent towing; a private property truck may also do consent towing; a consent truck may not do nonconsent towing.
| Permit type | Liability (combined single limit) | Cargo / on-hook | Can also perform |
|---|---|---|---|
| Incident management towing | $500,000 | $50,000 | Private property and consent towing |
| Private property towing | $300,000 | $50,000 | Consent towing |
| Consent towing | $300,000 | No separate minimum in the rule | Consent towing only |
Filing rules that cause permit problems
Under 16 TAC 86.400, the certificate must be submitted electronically, come from an insurer licensed and authorized in Texas, show the same name and address as the permit, and require 30 days' notice to TDLR before cancellation. Occupations Code 2308.110 requires evidence of insurance in the cab of each permitted truck. TDLR may revoke a permit when insurance cancels and no replacement is filed.
What the coverage pieces do
A towing program is built from several parts, and the TDLR minimums only address two of them.
- Auto liability pays for injury and damage you cause to others while operating the tow truck. This is the "liability" figure TDLR checks. Contracts with cities, counties, police rotations, motor clubs and property owners often ask for more than the TDLR minimum, plus additional insured status. See truck liability insurance.
- On-hook (cargo) coverage pays for damage to the vehicle you are towing or carrying while it is in your care. This is how most towers meet the TDLR cargo requirement.
- Garagekeepers covers customer vehicles in your care at your premises, such as on the storage lot. It can be written on a legal liability basis (pays only when you are legally liable) or a direct basis (pays regardless of fault); IRMI notes the direct form was historically called "extra legal" coverage. See what garagekeepers coverage is.
- General liability for premises and operations exposures away from the truck.
- Physical damage on your own wreckers, rollbacks and rotators. See truck physical damage insurance.
- Workers comp for operators working the roadside. Texas makes comp elective for most private employers, but rotation and municipal contracts often require it. See workers comp in Texas trucking.
Vehicle storage facilities
If you store towed vehicles at a licensed VSF, 16 TAC 85.400 sets a separate insurance requirement with a minimum per claim based on capacity: $9,000 for facilities storing up to 50 vehicles, $18,000 for 51 to 99, and $25,000 for 100 or more. As with tow permits, the certificate is filed electronically, must come from a Texas-licensed insurer, must match the license name and address, and must include 30 days' notice to TDLR before cancellation.
The rule sets the amount, not the policy form. Ask how your program satisfies it, and whether your garagekeepers limit actually fits the value of what sits on your lot on a busy night. The rule's minimum per claim is a floor, not a measure of what one storm or fire could cost.
What underwriters weigh and where towing gaps show up
Underwriters look at the type of towing (nonconsent and incident management carry different exposure than motor club work), heavy-duty recovery and rotator work, roadside time on highways, driver experience and MVRs, lot security, and how many vehicles are stored and for how long.
The handoff between on-hook and garagekeepers
On-hook covers the towed vehicle while it is on the truck; garagekeepers covers it on the lot. A vehicle damaged while being unhooked, or while being moved around the lot with a forklift or another truck, can fall between the two if the forms are not coordinated.
Recovery and winching damage
Damage done during a recovery (winching a vehicle out of a ditch, uprighting a truck) can be disputed as faulty work rather than an accident in transit. Check how the on-hook form treats it.
The towed truck's cargo
On a heavy-duty tow, the trailer may still be loaded. On-hook coverage on the vehicle may not extend to the freight inside it. Ask before you take the job.
Roadside injury
Operators working the shoulder are exposed to passing traffic. That is a workers comp or occupational accident question, not a liability one.
Limits below contract requirements
TDLR minimums satisfy the state, not a city rotation contract or a large property management agreement. Compare each contract's insurance section against your certificates. See certificate holder vs additional insured.
Common questions
How much insurance does a Texas tow truck need?
It depends on the TDLR permit. Incident management towing requires at least $500,000 liability and $50,000 cargo per truck; private property towing $300,000 liability and $50,000 cargo; consent towing $300,000 liability. Contracts often require more.
What is on-hook coverage?
On-hook is cargo coverage for the vehicle you are towing or carrying. It pays for damage to that vehicle while it is in your care on the truck, and it is how most towers meet the TDLR cargo requirement.
Is on-hook the same as garagekeepers?
No. On-hook covers the customer's vehicle while it is being towed; garagekeepers covers it while it is parked at your premises, such as a storage lot. Most towing companies with a lot need both.
What happens if my tow truck insurance cancels?
Your insurer must give TDLR 30 days' notice before cancellation takes effect. TDLR may revoke the permit if no replacement insurance is filed before the cancellation date, and it notifies DPS and law enforcement of permits revoked for lack of insurance. See what happens if truck insurance cancels.
Does my storage lot need its own insurance?
A licensed vehicle storage facility must file proof of insurance under 16 TAC 85.400, with minimums per claim of $9,000, $18,000 or $25,000 depending on how many vehicles the facility can store.
Sources
- Tex. Occ. Code ch. 2308 (Texas Legislature). Sections 2308.103 to 2308.105 (permit insurance minimums), 2308.110 (evidence in cab, Texas-authorized insurer) and 2308.151 (license required).
- 16 TAC 86.400 Insurance requirements (towing). Per-truck minimums by permit type, electronic COI, matching name and address, 30-day cancellation notice, revocation.
- 16 TAC 85.400 Insurance requirements (vehicle storage facilities). VSF per-claim minimums of $9,000, $18,000 and $25,000 by capacity, with filing conditions.
- IRMI glossary: garagekeepers legal liability. Direct (formerly "extra legal") garagekeepers coverage pays regardless of the insured's legal liability.
This page explains insurance, not law. Have your attorney review indemnity and contract language; our job is making the insurance match it.
Keep reading
Questions
What is garagekeepers coverage?
Coverage
Primary truck liability: what it covers, what the law requires, and where it breaks
Coverage
Physical damage: how your own truck and trailer get paid for after a loss
Coverage
Workers’ comp for Texas trucking companies: elective, but not optional in practice
Questions
What happens if my truck insurance cancels?
By operation
What insurance does a Texas car hauler need?