Coverage Name: Liability
What it Does: Liability is the type of insurance required by law in order to operate any vehicle on the road. It covers you against the costs of bodily injury and property damage of other parties in case you are involved in an accident.
Who Needs It? Every driver or business is required to carry liability insurance for tow trucks and other commercial vehicles in order to operate them legally.
Optimal Levels: Minimum levels are dictated by state and federal regulations, but their minimum levels may be too low for adequate coverage when dealing with heavy equipment like commercial tow trucks or roadside assistance vehicles. Liability tends to have split limits as well, meaning you might hear limits described as 15/30/10, for example. This would mean a policy holder would carry $15,000 in maximum liability payout for bodily injury per person, $30,000 for all bodily injury damages involved in an accident and $10,000 in property damage costs for all lost property in an accident.
Primary or general liability coverage is the kind of insurance that’s required by law to operate any vehicle on the road, not just tow trucks or commercial vehicles.
It’s basically the core of all vehicle insurance policies, covering damages you might inflict to others in terms of bodily injury or property damage in case you’re the cause or partial cause of an accident on the road. In terms of cost and limits, state and federal regulations dictate varying levels of coverage, oftentimes contingent on the vehicle size and type. For example, a tanker carrying flammable product would have higher minimum liability levels than say a tow truck that is a much smaller vehicle and doesn’t carry hazardous cargo.
Liability levels are split into 3 divisions, including the max coverage amount per person involved in an accident, the max bodily injury per accident in terms of all affected passengers and the max payout for property damages per accident.