How to Start a Tow Company in Georgia

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From minimum insurance standards to tariff caps to definitions for various towing scenarios, there is certainly more to starting a tow company in Georgia than just owning and operating a tow truck. Georgia towing laws are governed by the state's Department of Public Safety and are designed to protect both consumers and towing companies. If you want to start a tow company in Georgia, you will need to thoroughly understand the various towing laws and regulations in order to avoid penalties and potential lawsuits.

Fortunately, the requirements for a towing company in Georgia are pretty easy to understand, and most of them apply to a particular type of towing that you might not want to provide in the first place.

Understanding Georgia Towing Laws

Did you know that Georgia limits how much a towing company can charge its customers? Did you know that you could spend up to 12 months in jail if you towed a trespassing vehicle from private property without a nonconsensual towing permit? It's laws like these that require you to become well versed in local ordinances as the owner of a tow truck company in Georgia. You don't want to face the possibility of fines, jail time or lawsuits because you did not understand the law.

Start by visiting Georgia's Department of Public Safety website in order to read all available literature on Georgia towing laws from the perspective of both a tow company and a consumer. You should understand the consumer's rights just as much as your own during any towing encounter.

Another great method for understanding Georgia towing laws is to find a mentor with a successful tow company in the state. Ask him what he wishes he had known before he started his tow company. The Towing and Recovery Association of Georgia could also be a great resource for staying up to date on industry standards. Finally, consult a lawyer to help you interpret any laws that prove to be particularly confusing.

Type of Towing You Will Provide

Before you start your tow company in Georgia, you need to decide the type of towing you will or will not provide. Towing scenarios fall into one of four main categories:

  1. Consensual towing, in which the vehicle's owner agrees to have the vehicle towed.

  2. Nonconsensual towing, in which a private property owner requests to have a trespassing vehicle towed.

  3. Government towing, in which the towing occurs on government property with or without the vehicle owner's agreement.

  4. Repossession towing, in which a creditor has the right to reclaim ownership of a car when the debtor breaches the repayment or loan contract.

You also need to decide whether you will tow regular-sized vehicles like cars, trucks and vans or whether you will also tow semis, dump trucks and other heavy-duty vehicles. You can always narrow or expand your focus at any time, but it often helps to zero in on a niche market in the early stages of setting up a business. You may also need specific permits or licenses based on the type of vehicle and the towing scenario.

Georgia's Nonconsensual Towing Permit Law

One of the most important laws of which to be aware is Georgia's nonconsensual towing permit law. Only tow companies with a valid nonconsensual towing permit are allowed to remove vehicles from private property without the vehicle owner's permission. In this scenario, it is the property owner who requests that the vehicle be towed.

Georgia has a maximum fine of $2,500 or up to 12 months in prison as the penalty for performing a nonconsensual towing without the correct permit or with an expired permit. A nonconsensual towing permit is only valid for a full calendar year, and you must renew it and pay a permit fee on an annual basis. You can claim exemption from this permit requirement if you only tow from government property or if you only perform consensual towing, but you will need to complete a statement of intent in which you affirm that you will not perform nonconsensual towing and then file it with the state.

You can access and print an application online at the Georgia Motor Carrier and Consumer Advisory website. Supplemental documents required to obtain the nonconsensual towing permit in Georgia include a certificate of insurance that meets minimum liability requirements, a copy of the company's articles of incorporation (if it is an incorporated company or LLC) and proof of registration with the Georgia Secretary of State's office, proof of registration with either the Unified Carrier Registration or the Georgia Intrastate Motor Carrier Registration and a $300 fee. You get a little bit of free advertising with this permit, as your permitted company will be included on an official list on the GAMCCD website.

Understanding Nonconsensual Towing

When it comes to nonconsensual towing, there are a lot of rules and regulations that must be followed in addition to holding the correct permit. For example, you need to have a safe and secure place to store the impounded vehicle so that it does not sustain damage or become stolen while in your care. Therefore, including a nonconsensual towing service in your repertoire has some overhead fees that you will need to factor into your budget beyond just the $300 annual permit fee. At the very least, you will need to have property on which to park the vehicles and a security system to protect them.

In addition, nonconsensual towing cannot take place unless certain conditions are met. Namely, the private-property owner must have a clearly visible sign that states that unauthorized vehicles may be towed, where the towed vehicles can be recovered, the cost of recovering the vehicle and the types of payment accepted. Due to the specificity of the information legally required on the sign, private-property owners tend to choose their preferred towing partner in advance, which provides a unique marketing or advertising opportunity for your tow company.

Finally, one of the requirements for a towing company in Georgia that engages in nonconsensual towing is to keep fees below the maximum tariff fees mandated by the state. However, the fee schedule for nonconsensual towing is capped not only at a state level but can also be capped even lower at a local level. Therefore, it is important to understand ordinances that govern your municipality. Check the GAMCCD website for full details because the tariff caps vary based on the weight of the towed vehicle and include some miscellaneous scenarios (such as how much you can charge for the operator's time if the owner shows up after the vehicle has already been loaded but is still on the property).

Commercial Wrecker Emergency Tow Permit

If you want to serve commercial drivers in Georgia who break down or wreck, then you will need a Commercial Wrecker Emergency Tow permit. You cannot haul commercial vehicles without this permit, so it is smart to apply for one if you have the appropriate equipment. Otherwise, you might have to turn down work that comes your way.

The permit restricts you to hauling a maximum weight of 25,000 pounds on a single axle, 50,000 on one tandem axle and 38,000 on a secondary axle. The total length of the load can be no greater than 125 feet.

The Commercial Wrecker Emergency Tow permit must be renewed annually and costs $500 each time. Contact the Georgia Department of Transportation for more information on how to apply for this permit.

Register With GIMC or UCR

Registering with the Georgia Intrastate Motor Carrier Registration program or the Unified Carrier Registration program is a requirement for commercial vehicles in Georgia, including tow companies. Proof of registration with either of these programs is also a requirement for obtaining your nonconsensual towing permit.

Apply for the GIMC if you live in central Georgia because this registration is only for commercial vehicles that operate within the state and do not cross into other states. If you live near a state border and may tow vehicles across state lines, apply for the federal UCR program.

Register as a New Business With the State

Now that you understand some of the main laws concerning tow companies in Georgia, you must learn about something that all Georgia business owners have to do: register as a new business for tax purposes and for opening a business bank account. In Georgia, you can go to the Department of Revenue's Tax Center website and click "Register a New Business" in order to easily complete this process online.

Get Appropriate Business Insurance

Next, you will need to get several types of insurance for your tow company and budget for monthly insurance payments. Talk to an insurance agent who can help you get the appropriate packages; you will need vehicle and accident coverage for your own fleet of vehicles not to mention liability insurance for any vehicles you tow.

If you want to offer nonconsensual towing, you need to meet the minimum standards for liability insurance for that permit, including a minimum of $50,000 in Garage Keepers Legal Liability insurance for stored vehicles and a minimum of $50,000 for damage to another person's property in an accident.

When you sit down with your insurance agent, don't forget to ask about insurance benefit packages you can offer your employees if you plan to have full-time staff.

Networking and Advertising for More Business

A lot goes into starting any business, including securing startup funds, purchasing or renting a property, planning a budget and hiring employees to both operate the tow trucks and to handle dispatch and insurance claims. Give each of these steps the attention they deserve, but once the initial setup is done, you need to start a long-term marketing campaign to really move your towing company forward.

In particular, you need to think about your potential customers and how you will reach them. If you want to offer nonconsensual towing, reach out to private businesses to ask if they ever have a problem with abandoned or unauthorized vehicles on their property. If they do, you have the perfect opportunity to educate them about signage requirements and to suggest your company for any future towing. You can also contact your local government to find out how to contract with them for any towing needs on government property, which includes streets.

Finally, think about how you will reach vehicle owners. Consider applying to the AAA contractor network to take advantage of the extensive network of AAA members who might break down or need assistance. Auto shops often end up recommending towing services to help customers bring in broken-down vehicles for repair, and if you build your reputation, you can become one of those recommended towing companies. Last but not least, vehicle owners may seek out your services directly, so being easy to find on Google and in the phone book is a must.

References

About the Author

Cathy Habas specializes in marketing, customer experiences, and behind-the-scenes management. Cathy has contributed to sites like Business and Finance, Business 2 Community, and Inside Small Business. She served as the managing editor for a small content marketing agency before continuing with her writing career.