Key Takeaways

  • Towing contracts are essential agreements that define the scope of services, responsibilities, and payment terms between towing providers and clients.
  • These contracts can be secured through municipalities, private property owners, insurance companies, or auto clubs.
  • Essential components of a towing contract include services offered, fees, liability terms, and response times.
  • Insurance coverage, compliance with state/local laws, and clear cancellation clauses are critical to protect both parties.
  • Building professional relationships and maintaining a reliable track record improves chances of landing lucrative contracts.

Towing contracts refer to agreements between towing companies and their clients that outline the rights and responsibilities of both parties. These contracts address a wide range of concerns and issues that are related to towing services and ensure that the contracting parties will have a clear understanding of their roles and obligations. By signing a towing contract, a towing company and its client will be able to minimize confusion and conflicts and perform their duties more efficiently.

How to Succeed in the Towing Business

The towing business is never boring. This line of work exposes business owners to a wide range of situations and challenges, from changing tires in heavy traffic, to recovering a capsized vehicle, to dealing with disgruntled customers. If you wish to get into the towing business, there are a few options for you to choose from:

  • Work as an employee of a towing company, which will pay for your time and expertise and sell your services at a higher price.
  • Start your own towing business with one truck and offer your services directly to end-users, bypassing the employer.
  • Start your own towing business, hire employees, and sell their time and expertise to end-users.

In the towing industry, revenue can come from:

  • Vehicle storage
  • Vehicle preservation
  • Vehicle disposal
  • Sale of vehicle parts
  • Letter writing

The expenses of a towing company include:

  • Purchase of tow trucks
  • Fuel
  • Drivers' wages
  • Payment of damages
  • Insurance

Types of Towing Contracts Available

Towing contracts can vary depending on the client type and scope of service. Understanding the different types of towing contracts helps companies tailor their approach to secure the right agreements. Common towing contracts include:

  • Municipal Contracts: Agreements with city or county governments for impound towing, accident recovery, or police-initiated tows.
  • Private Property Contracts: These involve towing illegally parked or abandoned vehicles from commercial or residential properties.
  • Insurance Contracts: Insurance companies often outsource roadside assistance and require reliable towing partners to service claims.
  • Auto Club Partnerships: Organizations like AAA and similar auto clubs provide contracts to towing companies to assist their members.
  • Fleet and Dealership Contracts: Local repair shops, dealerships, and fleet operators may contract regular towing services.

Each of these contracts comes with unique requirements and expectations that should be clearly defined in the agreement.

Challenges Facing Towing Operators and Companies

In order to become a competent tow truck operator for a towing company, you have to be aware of what is happening around you and prepare for the worst. The need to be constantly prepared for unexpected events can make you somewhat pessimistic and paranoid. However, you should not let that unsettle you, since you have other things to be concerned about.

If you are operating a one-man-one-truck business, you can only take one customer at a time, meaning that you may miss out on some opportunities. If you have enough money to buy a new tow truck, however, you can hire another driver to perform towing duties, expanding your business.

It can be difficult to succeed in the towing business. You cannot purchase a franchise because there is none available, and it can be difficult to find a successful towing company for sale. Also, there is no college program that provides training for running a towing business. The driver certification program of the Towing and Recovery Association of America is the only tow-truck operation certification course that is nationally recognized. The Federal Motor Carrier Safety Administration recommends that two truck drivers complete this course before taking a towing job.

Key Legal Considerations in Towing Contracts

Towing contracts must be legally sound to protect both the service provider and the client. Some important legal aspects include:

  • Licensing and Certification: Ensure your business and drivers hold valid licenses and certifications, including local tow operator licenses where required.
  • Insurance Requirements: Contracts typically require general liability, on-hook towing insurance, and garagekeeper's coverage.
  • Indemnification and Liability Clauses: These outline who is responsible in case of damage, loss, or injury during towing operations.
  • Permits and Zoning Compliance: Confirm that your operations adhere to local ordinances regarding signage, storage lots, and impound procedures.
  • Cancellation and Dispute Terms: Contracts should outline procedures for termination and resolving disagreements.

Legal clarity in towing contracts reduces the risk of disputes and helps maintain compliance with industry regulations.

How to Secure a Towing Contract

Depending on your location, the towing business can be competitive. You need to offer more value and be better prepared than your competitors in order to secure a towing contract. The following steps can help increase your chances of getting a towing contract.

  • Make sure you have all the necessary licenses, permits, surety bonds, and other documents for operating a towing business in your area.
  • Get liability insurance from one of the authorized insurance providers in your state.
  • Work with an attorney to draft a contract for establishing agreements with companies that own parking areas or properties with parking lots.
  • Find a sign-maker to create “No Parking” or similar signs for securing contracts with strip malls and building owners.
  • Make copies of all licenses, permits, insurance policies, and bonds.
  • Print business cards to give out to companies and agencies that you plan to contract with.
  • Visit local businesses, law enforcement departments, and government agencies to offer your towing services.
  • Provide the companies or agencies with a booklet or binder that contains all the required licensing, insurance, and other information.
  • Explain the benefits that set your towing business apart from your competitors.
  • Ask companies or agencies if you can contact them to follow up after the initial meetings.
  • Sign a contract with a company or agency. Provide one original copy to the other party and keep one for your records.
  • Set up towing signs at the business or agency's location if you are contracting to provide towing services at a commercial location.

What to Include in a Towing Contract

A well-drafted towing contract helps prevent misunderstandings and provides a legal safeguard. Core elements to include are:

  • Scope of Services: Define the types of services provided (e.g., light-duty, heavy-duty, recovery, impound towing).
  • Service Area and Hours: Specify coverage zones and whether services are offered 24/7.
  • Response Time Expectations: Especially important in contracts with law enforcement or insurance providers.
  • Rates and Payment Terms: Include fee structures for various services and billing timelines.
  • Vehicle Storage and Release Policies: Clarify where vehicles will be held, for how long, and under what terms.
  • Insurance Requirements: State what types and limits of insurance are necessary to maintain during the contract.
  • Duration and Renewal: Note the contract’s length, renewal conditions, and notice requirements for termination.

Consulting an attorney ensures your towing contract language is enforceable and complies with local laws. You can find qualified attorneys on UpCounsel for assistance in drafting or reviewing towing contracts.

Building Relationships with Insurance Companies

Securing towing contracts with insurance providers requires preparation, professionalism, and reliability. Insurance companies look for:

  • Quick Response Times: Fast and dependable service is essential for roadside assistance claims.
  • Customer Service Skills: Drivers must treat customers courteously and professionally, representing the insurer's brand.
  • Clear Communication: Keeping dispatch updated and documenting each service call in detail is crucial.
  • Proper Equipment: Insurers favor towing companies with a well-maintained fleet capable of handling a variety of situations.
  • Valid Certifications: Insurance companies often require towing partners to be licensed, bonded, and insured.

To build these relationships:

  • Reach out directly to regional insurance office contacts.
  • Register with roadside assistance networks like Agero or Allstate Motor Club.
  • Maintain an online presence and collect positive customer reviews to strengthen your brand’s credibility.

Common Mistakes to Avoid in Towing Contracts

To protect your business and maintain strong client relationships, avoid these common mistakes in towing agreements:

  1. Vague Service Descriptions: Lack of clarity on what services are included can lead to disputes.
  2. Unclear Pricing Models: Failure to outline fees and potential add-on costs may result in payment issues.
  3. Lack of Termination Clauses: Every contract should define how and when either party can terminate the agreement.
  4. Overlooking Local Regulations: Failing to adhere to zoning or signage rules may void a contract or lead to fines.
  5. Missing Proof of Insurance: Always attach insurance documents to the agreement to avoid liability disputes.

Being proactive and detail-oriented can safeguard your business from legal or financial setbacks.

Frequently Asked Questions

  1. What is a towing contract?
    A towing contract is a legal agreement between a towing service provider and a client (such as a city, property owner, or insurer) outlining service terms, fees, and responsibilities.
  2. How can I get a towing contract with the city?
    Reach out to the city’s procurement or police department, provide your credentials, and submit a formal bid if required. You’ll need to prove compliance, insurance, and reliability.
  3. Do I need special insurance for towing contracts?
    Yes. Most contracts require liability insurance, on-hook coverage, and possibly garagekeepers’ insurance to cover vehicle storage.
  4. Can I cancel a towing contract early?
    Yes, if the contract includes a termination clause. Make sure both parties agree to notice periods and termination conditions in writing.
  5. What should I include in a towing agreement?
    Your towing agreement should list services, rates, responsibilities, service hours, insurance requirements, response time commitments, and dispute resolution terms.

If you need help creating or reviewing towing contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.