How to Start a Towing Company in 2026
Towing is one of the highest-revenue trades you can start solo — a single light-duty wrecker can clear $200k+ in year one with steady motor-club volume. It's also one of the most regulated, most insurance-heavy, and most cash-intensive. Here's the realistic path.
Pick your towing segment first
"Towing" is four businesses pretending to be one. Pick which one you're building before you spend a dollar.
- •Light-duty motor club (AAA, Geico, Allstate) — high volume, low per-call pay
- •Light-duty private pay + impound — better margins, harder to start
- •Medium-duty (RVs, box trucks, fender benders) — fewer trucks compete
- •Heavy-duty (Class 8, rollovers, recovery) — highest margins, $400k+ truck cost
The truck: lease, buy used, or buy new
Your first truck is your single biggest decision. Get it wrong and you're bankrupt before you have a customer.
- •Used light-duty flatbed (5–10 years old): $45k–$85k
- •New light-duty flatbed: $110k–$160k
- •Used medium-duty wrecker: $90k–$180k
- •Used heavy-duty rotator: $250k–$650k
- •Lease vs. buy: lease only if you can't qualify for an SBA equipment loan
Licenses and insurance that will eat your year-one P&L
Towing insurance is where new owners get a heart attack. Budget $15k–$45k/yr per truck minimum.
- •DOT number + MC authority (required for interstate)
- •State tow license (every state has its own rules)
- •On-hook coverage ($75k–$200k per truck)
- •Garage keepers liability ($300k–$1M)
- •Commercial auto with $1M+ liability
- •Cargo coverage if you do recovery
- •Workers comp on every employee
Getting on motor club call lists
Motor clubs (AAA, Geico, Allstate, FleetNet, etc.) are the single biggest source of consistent towing volume. They're also the lowest payers per call.
- •Apply directly through each motor club's vendor portal
- •Most require 1+ year in business and proof of insurance
- •Expect $35–$75 per light-duty call from motor clubs
- •Private pay tows: $125–$300 per light-duty call
- •Strategy: motor clubs fill the day; private pay drives the margins
Pricing private-pay tows so you actually make money
Motor club rates are set for you. Private pay is where you build the business.
- •Hook fee: $75–$150
- •Per-mile (loaded): $4–$8/mile light-duty, $9–$15/mile medium, $15–$25/mile heavy
- •Storage: $35–$95/day depending on state
- •After-hours / weekend: 1.25x–1.5x base rate
- •Winching: $150–$400 per pull, more for difficult recoveries
Building a dispatcher / running solo
Solo owner-operators burn out by month 6 if they're also dispatching. Plan for help early.
- •Run a digital dispatch system from day one (don't use a notebook)
- •Use an answering service for first 90 days
- •Hire a part-time evening dispatcher around month 3
- •Drivers: pay per call (30–40% of gross) or hourly + commission
Frequently asked
How much does it cost to start a towing company?
$80k–$200k for a single light-duty truck setup; $400k–$1M+ for a multi-truck operation with medium/heavy capability.
Do I need a CDL to start a towing company?
Not for light-duty (under 26,001 lbs GVWR). You need a Class B CDL for medium-duty and a Class A for most heavy recoveries.
How do I get on AAA's call list?
Apply through AAA's contractor portal in your region. They require commercial insurance proof, driver background checks, and usually a vehicle inspection.
How long until a new towing company is profitable?
Most operators hit break-even by month 6 and steady profitability by month 12 — assuming they're running motor club volume alongside private-pay work.
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Parts pros use for this job
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- •Mechanic tool set
- •OBD-II scanner
- •Jack stands
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