Repossession work can be steady revenue for a towing company, but it carries a different kind of liability than a motor club call. On a roadside tow, the vehicle owner asked for help. On a repossession, the owner usually did not, and may be standing in the driveway. Claims for wrongful repossession, breach of the peace, damaged vehicles and missing personal property are a regular part of this business. This guide explains where those claims come from, the legal rules that shape them, and how to set up procedures and insurance so one bad recovery does not threaten the company.
This is general information, not legal advice
Repossession law is set largely by each state, and the rules change. Have an attorney who knows repossession law in the states where you work review your procedures and your agreements with lenders and forwarding companies.
Where repossession claims come from
Breach of the peace
Confrontations, entering closed garages or gated areas, continuing after the owner objects, or using threats.
Wrongful repossession
The loan was brought current, the order was cancelled, or the crew took the wrong vehicle.
Vehicle damage
Damage during a fast hookup, a rough recovery from a tight space, or while the unit sits in storage.
Personal property
Tools, phones, medication, child seats or cash the owner says were in the vehicle and never returned.
Auto accidents
Repossession crews often work at night and under time pressure, which raises the risk of collisions.
Injury to people
An owner who grabs the vehicle or jumps in during the hookup, or a crew member who is assaulted.
The legal framework, in plain terms
Self-help repossession and the breach-of-the-peace line
Under the Uniform Commercial Code as adopted by the states, a lender with a security interest may generally take back collateral after default without going to court, provided it does so without a breach of the peace. What counts as a breach of the peace is defined by each state's statutes and court decisions. Common risk points include continuing after the owner objects, entering enclosed or locked areas, and confrontations of any kind.
The Fair Debt Collection Practices Act
Repossession agents can face federal liability too. Section 808(6) of the FDCPA, codified at 15 U.S.C. 1692f(6), prohibits taking or threatening to take any nonjudicial action to dispossess or disable property if there is no present right to possession of the collateral through an enforceable security interest, no present intention to take possession, or the property is exempt by law.
In Richards v. PAR, Inc. (7th Cir. 2020), as summarized by the California Lawyers Association, a borrower objected and ordered a tow crew off her property; police were called and handcuffed her while the car was towed. The court held that repossessors can qualify as debt collectors under the FDCPA, that whether a repossessor has a present right to possession is decided by state law, and that a jury could find the crew lost that right once the borrower objected. The case is a useful reminder that a valid repossession order does not protect a crew that keeps going over an objection.
Servicemembers
The Servicemembers Civil Relief Act, at 50 U.S.C. 3952, provides that if a servicemember entered into a contract to buy a motor vehicle and paid a deposit or installment before entering military service, the vehicle may not be repossessed for breach of that contract during service without a court order. The U.S. Department of Justice has brought enforcement actions against auto lenders over repossessions that violated this rule. Lenders are responsible for checking military status, but your agreements should state that you will not recover a unit the lender has not cleared.
Regulatory attention on wrongful repossession
In 2022 the Consumer Financial Protection Bureau issued a bulletin warning auto servicers about wrongful repossessions, including repossessing from borrowers who had followed instructions to avoid it and repossession agents not confirming that an order was still active, as reported by Consumer Finance Monitor. That bulletin was withdrawn in May 2025, but lenders still expect their repossession vendors to confirm orders and handle personal property carefully, and many write those expectations into vendor agreements.
Field procedures that prevent claims
- Confirm the order is active with the lender or forwarder immediately before the recovery, and record who confirmed it and when.
- Match the VIN, not just the plate, color and model, before hooking up.
- Stop when the owner objects. Leave and report back to the client rather than arguing, negotiating or waiting it out.
- Do not ask law enforcement to help take the vehicle. In Richards, police were called after the owner objected and the car was towed while she was handcuffed; that recovery led to the lawsuit.
- Stay out of enclosed areas. Closed garages, locked gates and fenced yards are common breach-of-the-peace issues.
- Use body or dash cameras where lawful, and photograph the vehicle on all sides before and after the hookup.
- Follow state notice rules after the recovery, such as notifying local law enforcement, where they apply.
- Train crews on de-escalation and make clear that safety comes before the unit.
Handling personal property and storage
Personal property disputes are among the most common complaints after a repossession. A written process protects you:
- Inventory the contents at the scene or immediately on arrival at your yard, with photos and a second person present when possible.
- Bag, label and store property in a secure area separate from the vehicle.
- Give the owner clear written instructions for retrieving property, consistent with state law and your client's requirements.
- Do not charge retrieval fees unless state law and your client agreement allow it. Retrieval fees for personal property were one of the practices regulators criticized.
- Keep the inventory and photos with the file for as long as your attorney recommends.
Repossessed units in your yard also need protection from theft and vandalism. Our guide to storage lot security covers fencing, lighting, cameras and key control.
How insurance typically responds, and where the gaps are
Repossession is often excluded or limited on a standard tow truck program unless it is disclosed and rated. Tell your broker what share of your revenue comes from repossession before you take on the work. Forms vary by carrier, but a repossession program usually combines:
| Exposure | Coverage that typically responds | What to check |
|---|---|---|
| Crash while driving to or from a recovery | Commercial auto liability | Repossession disclosed on the application; all drivers listed |
| Damage to the repossessed vehicle in tow | On-hook coverage | Per-vehicle limit and any repossession exclusion |
| Damage or theft while the unit is stored | Garagekeepers / vehicle protection coverage | Theft, vandalism and fire included |
| Wrongful repossession, breach of the peace, conversion of property | Specialty repossessor's errors and omissions or professional liability, where available | Defense costs, sublimits, and exclusions for intentional acts |
| Crew member injured during a confrontation | Workers' compensation (in Washington, L&I) plus stop gap | Stop gap endorsement on the general liability policy |
In Washington, registered tow truck operators must also carry the minimum liability and vehicle protection coverage required by RCW 46.55.030. Our articles on garagekeepers liability and commercial auto liability for tow operators go deeper.
Read the lender and forwarder agreements
Repossession agreements commonly require specific limits, additional insured status for the lender, and broad indemnity running from you to them. Some ask you to cover claims caused by the lender's own errors, such as a cancelled order it failed to pass along. Send every agreement to your broker before signing so the insurance requirements can be matched and the indemnity reviewed with counsel.
Documentation that wins disputes
Most repossession claims turn on what happened in a few minutes in a driveway. Keep a complete file for every recovery: the assignment, the confirmation call, photos and video, the property inventory, notices sent and the release. Our article on documentation best practices covers what to keep. The same discipline helps with private property impounds, which share many of the same risks.
When to call a broker
Call us before you start repossession work, sign a new forwarder or lender agreement, or expand into another state. We can help you see how your auto, on-hook, garagekeepers and liability policies respond to repossession claims and identify the specialty coverage your operation may need. Learn more about our tow truck insurance program.
Sources
- Justia — 15 U.S.C. 1692f, Unfair practices (FDCPA section 808)
- California Lawyers Association — Richards v. PAR, Inc. (7th Cir.) and FDCPA section 1692f(6)
- U.S. Department of Justice — Complaint, United States v. HSBC Auto Finance (SCRA, 50 U.S.C. 3952)
- Consumer Finance Monitor — CFPB issues compliance bulletin on auto repossession
- National Consumer Law Center — CFPB Compliance Bulletin 87 FR 11951 (withdrawal noted)
- Washington State Legislature — RCW 46.55.030, Operator's license, bond and insurance