Reports have emerged of regulatory finger pointing in California that’s preventing customers with total loss vehicles from being fully compensated for storage fees.
California’s DOI told RDN that there is currently a “substantial law” describing a repair shop’s storage fee obligations and rights. It said the laws contained in the California Vehicle Code are enforced by the state’s Bureau of Automotive Repair (BAR).
But a BAR spokesman told RDN that storage fees don’t fall under its jurisdiction, although it does help resolve storage-fee related complaints to “achieve a satisfactory resolution for all parties and educate the automotive repair dealer, as necessary, on the applicable laws related to vehicle storage.”
“BAR currently does not have direct authority to enforce the storage fee laws established in the Vehicle Code,” Renee Santos, a spokeswoman with the California Department of Consumer Affairs, said. “Any enforcement action taken by BAR against an automotive repair dealer must be tied to BAR’s authority in the Business and Professions Code (e.g., fraud, false/misleading statements, etc.).”
California’s Assembly Bill 2392, which took effect in January 2019, states:
- “Any insurer that is responsible for coverage for ordinary and reasonable towing and storage charges under an automobile insurance policy to an insured or on behalf of an insured to a valid claimant, is liable for those charges to the person performing those services when a vehicle is towed and stored as a result of an accident or stolen recovery. The insurer may discharge the obligation by making payment to the person performing the towing and storage services or to the insured or on behalf of the insured to the claimant;”
- “Any insured or claimant who has received payment, which includes towing and storage charges, from an insurer for a loss relating to a vehicle is liable for those charges to the person performing those services;”
- “All towing and storage fees charged when those services are performed as a result of an accident or recovery of a stolen vehicle shall be reasonable;”
- “For purposes of this section, a towing and storage charge shall be deemed reasonable if it does not exceed those fees and rates charged for similar services provided in response to requests initiated by a public agency, including, but not limited to, the Department of the California Highway Patrol or local police department;” and
- “A storage rate and fee shall also be deemed reasonable if it is comparable to storage-related rates and fees charged by other facilities in the same locale. This does not preclude a rate or fee that is higher or lower if it is otherwise reasonable.”
However, the manager of a California repair shop said he has found that when BAR deems auto storage fees reasonable during times of dispute, it has no way to ensure that insurers pay the full contested amount.
Andrew Batenhorst, who runs Pacific BMW Collision Center, said he’s witnessed a few cases where drivers were left on the hook for storage fees after their insurers refused to pay his shop’s standard daily fee.
In one case, an insurance company refused to pay the required fees for a totaled car parked on the shop’s lot, feeling the “total loss charges were unreasonable,” Batenhorst told RDN.
As he said he always does in such cases, Batenhorst referred the insurance company to seek a second opinion with BAR, which mediates and investigates repair complaints between shops and consumers.
Batenhorst said after the company consulted with BAR, he received a call from the state agency indicating his charges were reasonable. He was told that BAR uses LaborRateHero to verify storage rates in each market.
According to LaborRateHero, storage fees average $224 per day and can be as high as $350 per day in Glendale, where Batenhorst’s shop is located.
Pacific BMW charges $250 per day, but Batenhorst said the insurer, Farmer’s Insurance, was only willing to pay $175 per day. Farmer’s Insurance did not respond to an RDN request for comment by publication deadline.
“The BAR rep only mentioned that they advise the customer to file a DOI complaint in these situations, but they can’t go any farther than that due to missing legislation,” he said. “The DOI came back and said, ‘sorry, we can’t help you.’”
In this case, he said the insurer paid Pacific BMW its storage fees but deducted the difference in cost from the vehicle owner’s total loss settlement, Batenhorst said.
“The customer then was punished in this case,” he said. “There really needs to be a law created to stop the customer from being punished for the lack of a law existing.”
Batenhorst relayed another situation where a separate insurer, this time Mercury, took issue with paying the center’s storage and shop fees after a vehicle was towed to Pacific BMW and within days declared a total loss.
He said in that case, $810 was deducted from the policyholder’s settlement.
“I contacted the BAR referral hotline for review of the charges to determine if they were unreasonable, which didn’t help,” he said. “They diverted me to talk to the DOI about this once they found out there is an active insurance claim.”
Batenhorst said DOI again told him that there was no legislation for it to govern this area.
He said it’s time for that to change.
“It’s a huge waste of time,” he said. “The amount of brain damage we’ve all suffered from going back and forth trying to resolve this and having the two biggest legislative bodies that our industries — the insurance side and the collision side — both basically pointing the finger at each other saying, ‘Hey, there’s no law in place to punish the insurance company’s behavior.’”
Michael Soller, California DOI deputy commissioner, told RDN that the department receives and investigates all disputes between a consumer and insurer under its jurisdiction.
“Our consumer services experts will investigate, attempt to mediate, and review any insurance dispute,” he said. “There are various laws that require Department of Insurance licensees to respond to us on insurance disputes. These laws are too numerous to mention, but they generally describe how a licensee must respond to our Department and in what timeframes, depending on the particular issue in dispute.”
He said the DOI has jurisdiction to enforce disputes depending on the specifics of the case and whether the laws in dispute are under its jurisdiction.
Jack Molodanof, a lobbyist and business lawyer, told Repairer Driven News BAR is drafting the guidance to address discrepancies between shop storage fees and insurer payouts in total loss claims.
“BAR is working and coordinating with the Department of Insurance [DOI] on storage issues to determine and clarify responsibilities of consumers, auto repair dealers and insurers,” he said. “The hope is that any proposed storage regulations will clarify responsibilities among all the stakeholders.”
Soller said anyone wishing to file a dispute with a DOI licensee can call 800-927-4357 or report the issue online.
Featured image: Tanyss