Auto insurance has become expensive for tow truck drivers over the past four years. Commercial auto premiums have gone up by 4.7% since 2020, according to the Federal Reserve Bank of St. Louis. Rising premiums make it harder for startup tow truck businesses (and even established ones) to build up liquidity and thrive in an already challenging industry.
In this article, we’ll show you why commercial auto insurance for your tow truck has been rising in the past four years. Then, we’ll tell you about how you can still grow your fleet, conserve your cash, and use your liquidity to offset your truck’s insurance premium with tow truck financing.
Tow truck financing is a solution that allows you to expand your fleet without draining your cash reserves. Instead of paying the full price of a new truck upfront, you can spread the cost over time and use your cash flow to cover your insurance premiums.
In this article…
- The Problem with Rising Insurance Premiums in The Tow Truck Industry
- The Smart Way to Offset Rising Premiums: Tow Truck Financing Preserves Your Capital
- More Cash in Your Hands Means Paying Premiums Ahead of Time
The Problem with Rising Insurance Premiums in The Tow Truck Industry
All drivers, not just towers, are facing higher insurance premiums because of the escalating claims costs in the commercial auto insurance market.
Understanding the Financial Strains of Higher Insurance Premiums on Tow Truck Drivers
The escalating costs in the commercial auto insurance industry are a problem for tow truck drivers because higher costs affect business revenue and sustainability.
Reasons Behind Expensive Insurance Premiums
These factors are causing insurers to hike premiums, exit the market, or impose stricter conditions on tow truck drivers and other commercial vehicle owners.
A higher premium per tow truck means higher operating costs, meaning less profit margins per tow. If insurance premiums are too expensive, some tow truck businesses may be unable to afford them or have to cut corners on other aspects of their operations.
Not only does this compromise the quality and reputation of your towing services, it can also make it harder for your business to expand and – in a worst-case scenario – potentially force it to close.
The Smart Way to Offset Rising Premiums: Tow Truck Financing Preserves Your Capital
Fortunately, there are ways to mitigate the higher cost of insurance premiums, keep your business liquid, and grow your fleet to keep it profitable. Tow truck financing can help you offset the rising expenses of increasing insurance premiums by helping you conserve your cash!
Tow truck financing is a way of obtaining the vehicles you need without paying the total price upfront. Instead, you can finance your tow trucks from Beacon Funding for a low monthly payment.
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This way, you can preserve your working capital for other expenses, such as payroll, fuel, tow truck maintenance, and insurance premiums.
More Cash in Your Hands Means Paying Premiums Ahead of Time
Tow truck financing is a way to help you add another truck and, instead of spending your cash on buying the truck outright, you can conserve your liquidity. By having more cash in your hands with a low monthly tow truck payment, you can spend your liquidity on paying your insurance premiums ahead of time!
Using Your Cash in Other Areas of Your Business
Another advantage of having more cash on hand is that you can manage your insurance premiums by investing in safety measures and driver training. You can use some of the money you save from financing your trucks to:
- Install tracking devices
- Get dashboard cameras
- Upgrade your trucks with anti-theft systems
All of which can lower your risk of accidents and thefts!
Insurance Companies Love When You Pay Premiums Ahead of Time
When you finance your next tow truck with Beacon Funding, you can free up some of your capital to spend on providing your drivers with ongoing education and coaching, which can improve their driving records and performance.
By showing your insurer that you are committed to safety and quality, you can negotiate better terms and conditions for your policy. Now that’s growing your business!
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