For more than a year, a totaled vehicle has sat at Jeff Butler’s auto repair shop, Haury’s Collision & Vintage, in Washington State, as Safeco/Liberty Mutual refuses to pay costs associated with the vehicle’s claim, the businessman says.
“Like all repair facilities and tow yards, we charge for storing vehicles as we have limited parking/storage and are unable to receive more vehicle repairs when our space is taken up,” Butler said in a letter to state legislators. “Vehicles sitting around not being repaired drive up our overhead expenses and hurt our ability to conduct business significantly.”
Butler sent the letter to legislators Friday asking for auto insurance reform to protect businesses and the public against “unfair and deceptive practices” he says insurers are using through photo estimating, artificial intelligence (AI), and virtual claim processes.
In the letter Butler says, the vehicle was dropped off for repairs in 2022 following a collision, the letter said. An initial estimate was completed, along with documentation stating the vehicle likely had frame and structural damage and needed further diagnosis on a frame bench. A list of shop charges, including vehicle storage costs, was sent to Safeco/Liberty Mutual.
Safeco/Liberty Mutual refused Butler’s estimations and countered with its estimation thousands of dollars lower, the letter said. The insurer didn’t provide a reason for denying the estimate, violating state law, the letter said.
State Law W.A.C.284.30.390 requires insurers to disclose why their estimates are lower than estimates given by the policyholder.
Prior to the vehicle being identified as a total loss, the vehicle owner made seven attempts to demand a third-party appraisal by invoking an appraisal clause in their insurance policy, the letter said.
After several months of Safeco refusing to honor the clause, the customer authorized the repair shop to begin repairs at the risk of their out-of-pocket expense.
“To our customer’s credit, they recognized Safeco was acting in bad faith and flagrantly violating the unfair claims practice rules,” the letter said.
The shop discovered frame and structural damage to the vehicle during a structural inspection and the repair plan was updated.
Safeco declared the vehicle a total loss based on the shop’s documentation, the letter said. The declaration came three months after the vehicle was initially brought to the shop.
The vehicle’s title was transferred to Safeco and the company instructed the customer to call the shop to “release interest” of the vehicle, the letter said.
“Even though Safeco caused months of delays and significant costs for labor, diagnostics, and storage charges, Safeco tried to avoid paying for these costs and told their insured it was going to take those costs out of their insured’s vehicle value settlement,” the letter said. “Even worse, Safeco tried to force their insured to ‘owner retain’ their vehicle against their will and refused to have the vehicle removed from our shop leaving the vehicle owner to pay the costs for Safeco’s bad faith claims handling and delays.”
The customer hired a claims expert to help, and after more months of arguing, Safeco agreed to pay the total value of the vehicle without deducting the shop charges or the salvage value, the letter said.
Yet, the vehicle remained at Butler’s shop.
“At this point, Safeco had transferred the title of the vehicle into its own name,” Butler writes in the letter. “Even though Safeco knew the circumstances surrounding the title and the lien against it when they acquired it, Safeco demanded our repair facility accept Safeco’s offer for about 20 cents on the dollar or they would illegally abandon the vehicle on our property.”
Butler refused the offer and had a lawyer send multiple letters to the insurer demanding the vehicle removal and payment for the five months of storage.
“We have attempted to file a chattel lien on the vehicle and filed the correct paperwork with the Department of Licensing, but Safeco has refused to cooperate and has declined our requests for the title, so we are prevented from selling the vehicle to remove it from our lot. More than a year has passed with no resolution in sight.”
A chattel lien allows a person who provided services or material for a vehicle to take ownership, if the person has not been compensated.
Butler says in the letter that his only recourse is to file a lawsuit against the shop’s customer.
“We have no recourse against Safeco for bad faith claims handling as we are not a policyholder,” the letter said. “The insured would then have to sue Safeco for bad faith claims handling. While we don’t want to have to do this, we very well may be forced into it due to Safeco’s refusal to pay the costs as well as provide the title for the vehicle.”
Abandonment of the vehicle also breaks the law, Butler said
R.C.W. 46.55.230 states that it is a gross misdemeanor for a person to abandon a junk vehicle on a property.
“If a junk vehicle is abandoned, the vehicle’s registered owner shall also pay a cleanup restitution payment equal to twice the costs incurred in the removal of a junk vehicle,” the law states.
Liberty Mutual, which owns Safeco, did not respond to a Repairer Driven News request for comment Tuesday.
Auto Repair shops in other states have previously said Safeco/Liberty Mutual was using tactics to “intimidate” them into paying the company back for costs such as rental car and storage fees.
Shops told Repairer Driven News they were receiving letters from a collection agency demanding reimbursement for claims previously paid by the insurer.
Butler said in the letter that despite Safeco breaking the law, he has no recourse through state departments. He asks legislators in the letter to give Washington state Office of the Insurance Commissioner the ability to fine/sanction insurers on individual claim circumstances.
“I believe Safeco’s actions go far beyond unfair and deceptive,” Butler said. “They appear retaliatory and punitive in nature. The message Safeco is sending to repair shops appears to be that Safeco is above the law and that the repair shops are required to simply “take it or leave it”.
Another customer of Butler’s has been legally fighting their insurance company for seven years due to low estimations and storage costs.
Meliha Jusupovic filed a lawsuit against Integon and Nationwide Appraisals to reclaim storage costs and other expenses related to a 2016 claim after her car was rear-ended.
The insurance company also fought estimate costs for months before finally totaling the vehicle, RDN previously reported. The company then refused to pay $10,000 in storage fees or remove the vehicle.
Storage fees for the vehicle were at $165,000 when the lawsuit was filed earlier this year.
Butler said Tuesday the suit is set for trial in February.
Other repair shops throughout the nation have expressed similar concerns about storage costs.
Andrew Batenhorst, who runs Pacific BMW Collision Center in California, told Repairer Driven News in May that 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.
California’s Bureau of Automotive Repair (BAR) works to resolve storage fee complaints but doesn’t have any authority for enforcement action.
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.
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.”
photo courtesy pakhnyushchyy/Istock