Towing and Labor Coverage in Car Insurance

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 30, 2021

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Here's what you need to know...

  • Towing and labor coverage is an additional option that can help you in the event of an accident or breakdown
  • There are several different options for roadside assistance available from almost every insurance company
  • A variety of factors is considered when an insurance company determines towing and labor coverage costs

Car insurance towing and labor coverage is an al a carte option for your car insurance policy that covers the cost of towing your car to your mechanic and the labor costs for repairing your car on the side of the road.

The towing addition to your policy is pretty straight forward. One of two things happen in this situation:

  • Some car insurance companies will call a towing company for you and pay them directly for their services. Companies like Progressive offer this service which can make a break down much easier.
  • You could call a tow company and pay them for their services. After you are done, submit your receipts to the insurance company, and they will write you a check for the amount covered under your policy.

The labor part of your coverage is a little more complex. Many people are under the impression that a mechanic can come to their vehicle and do the work that needs to be done, and they won’t have to pay anything.

However, this type of coverage covers the cost of the labor involved in a repair job on the side of the road.

For example, if you blow a tire and you don’t have a spare, a company can come out with a new tire and change it for you. The insurance company will pay for the labor of changing your tire, but you are going to have to pay for the tire itself on your own.

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Under what circumstances is towing and labor coverage become available?

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Many people think that towing and/or labor coverage is only available if you have a car accident. The good news is that this isn’t true; you can use this coverage anytime you need it.

It doesn’t matter if your car just up and stops moving or if you are in a major accident and your car is smashed up; you have access to the same service in either situation!

You do need to be aware that filing a claim for towing and repair is the same as filing any other claim.

Most insurance companies won’t increase your rates if you use this service a couple of times.

However, if you have a problem vehicle that constantly breaks down, then you can expect a rate increase.

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Can I add towing and labor coverage to an existing policy?

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You can add towing and labor coverage any time that you want. In fact, you can change any part of your policy at any time.

If you find that you are driving less or that you need more or less coverage, your insurance company will accommodate you.

The good news is that your insurance company doesn’t have the same luxury.

If you have an accident, for example, your insurance company cannot raise your rates until you come to the end of your current contract with them.

In rare cases, an insurance company may have you sign a waiver in advance of an accident. If they do present you with one, don’t just sign it. Find a different insurance company!

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What roadside assistance plan should I have?

There is a lot of information available today about what is the right roadside assistance to have.

In fact, a Consumer Reports article titled “Roadside Assistance: Beware the gaps” provides valuable information that can help you choose.

As an example, mothers and fathers with young children might choose to have the extra coverage in case there is a breakdown or issue with their car while the children are with them.

Additionally, older people may choose to have the coverage as a safety net in case they need a tire changed and they are unable to perform the work themselves.

Individuals who live in small towns where the houses are not close together and there are limited gas stations and repair shops nearby may choose to have the towing and labor coverage.

On the other hand, people who live in more populated areas may feel comfortable that they would be able to get assistance quicker and not necessarily need the towing service.

Does the type of car I drive affect my labor and towing rates?

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All the factors that are taken into consideration when calculating your premium come into play when your labor and towing rate is added.

For example, if you are driving a brand new car with many safety features, it is less likely that it will break down and require towing.

In addition, many new cars have features that allow the car to be unlocked from a satellite rather than physically having to break into the car which would make the need for a lock-out service less likely.

Taking all these factors into account, insurance companies consider the likelihood that you will need towing and labor service and calculate the rate from there.

If you are driving an older car with a lot of miles, your towing and labor rate will be higher because there is a higher probability that you will need assistance.

Speak to either your insurance agent or the customer service department at your insurance company to take advantage of all of available discounts while making sure you are covered in case you need additional protection.

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References:

  1. https://www.allstate.com/tools-and-resources/car-insurance/towing-and-labor-cost-coverage.aspx
  2. https://www.progressive.com/experience/home-z/
  3. http://money.cnn.com/2006/06/23/news/companies/towing_insurance/index.htm?section=money_latest
  4. https://www.all-about-car-accidents.com/resources/auto-accident/after-car-accident/what-car-accident-release-form
  5. https://www.consumerreports.org/cro/2012/05/roadside-assistance-beware-the-gaps/index.htm

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