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Oklahoma bill to cap towing and storage fees moves out of committee

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Insurance | Legal
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An Oklahoma bill proposing a cap on towing and storage fees made it out of the Senate Retirement and Insurance Committee Tuesday. 

The bill would extend the state’s Corporation Commission’s ability to set towing and storage fees for non-consensually towed vehicles to include consensually towed vehicles. 

Currently, state law limits the cost of towing and storage fees by a wrecker or towing service and repair shops if the vehicle is towed without the owner’s permission by law enforcement. For example, law enforcement removing a wrecked vehicle from a roadway. 

The bill, SB1741, would extend the same limits to vehicles towed with the consent of a vehicle owner. For example, a vehicle owner asks a towing company to move a vehicle from their driveway to a repair facility. 

Sen. Lonnie Paxton (R-District 23) introduced the bill on Feb. 05. 

Paxton, an insurance agent, also recently proposed SB1853, limiting what collision repair shops can charge for multiple standard procedures and storage rates or fees. The bill has sat in committee since the beginning of February with no movement. 

Paxton said his new bill aims to wrangle a few “bad actors” charging $200-$300 for storage fees. He also said the bill raises the current storage fees on non-consensual tows by about 35%. Consensual tows would be billed the same fees if the bill is approved. 

Maximum outdoor storage rates would be: 

    • $24 for a single vehicle including a motorcycle, automobile, or light truck up to 20 feet in length 
    • $32 for a single vehicle or combination of vehicles more than 20 feet in length but less than 30 feet
    • $39 for a single vehicle or combination of vehicles more than 30 feet and up to 8 feet in width 
    • $55 for a single vehicle or combination of vehicles more than 30 feet in length and more than 8 feet in width 

Maximum indoor storage rates would be: 

    • $39 for a single vehicle including a motorcycle, automobile, or light truck up to 20 feet in length 
    • $47 for a single vehicle or combination of vehicles more than 20 feet in length but less than 30 feet
    • $55 for a single vehicle or combination of vehicles more than 30 feet and up to 8 feet in width 
    • $70 for a single vehicle or combination of vehicles more than 30 feet in length and more than 8 feet in width 

Labor Rate Hero estimates the average cost of daily storage within 25 miles of an Oklahoma City zip code at $119. The average storage cost within 25 miles of a Tulsa zip code is $101 daily. 

Brian Shellem, Oklahoma Auto Body Association (OKABA) legislative committee chair, said the fees proposed in the bill are relatively low for most populated areas in the state. He said it doesn’t make sense to hold the entire industry to low rates because of a few bad actors. 

“It doesn’t mean you need to kill the entire industry and overregulate,” Shellem said. 

Representatives from 10 repair shops and two dealerships were present at the committee meeting, Shellem said. 

“We are going to do our best to educate senators and House members to the truth,” Shellem said. 

Multiple senators expressed concerns with the bill before it passed through the committee. 

“I got my car stolen last year from a golf course and it took me a month to get my car back, but the people that had my car to fix it had it for an extensive period of time before the insurance decided it wasn’t totaled,” said Sen. Kevin Matthews (D-District 11). “…And I’ve been told that you can have these cars sitting on the lot while the insurance company is deciding whether the car is going to be totaled and its taking up all this space and then they may lose a ton of money. Is that true?”

 Paxton agreed that it does happen.  

“It is not in their [insurance companies] best interest to do that,” Paxton said. “If you want to find me examples of it, they are out there. There are examples out there of where a claim goes way, way too long.” 

He said insurance companies aren’t against paying storage fees, but some businesses are raising storage fees to a range of $200-$300. 

“I have multiple examples of it throughout the state where these storage fees are going way, way, way up,” Paxton said. “These insurance companies can’t look at a business and say this is a bad actor. We are not going there anymore.” 

Shellem said on Thursday that Paxton underplayed how often insurance companies delay claims. 

“They [insurance companies] claim it’s a rarity,” Shellem said. “It happens on a regular basis.” 

Owners and managers of repair shops nationwide have expressed concerns about insurance companies refusing to pay storage costs after delaying the decision to total a vehicle for weeks to months following a shop’s initial estimate that would total a vehicle.

Gary Wano, owner of GW & Son Autobody located in Oklahoma, previously said he has at least half a dozen files where insurers wouldn’t immediately accept his preliminary estimate, which conveyed the vehicle was an obvious total loss. In each case, insurers took multiple weeks and up to two months to agree and finally total the vehicle.

Sen. Shane Jett (R-District 17) said storage fees are a way for repair shops to pressure insurance companies to move quickly. 

He said, “How are we not tying their hands from putting pressure on the insurance company to pay quickly so their customer can get out of the door so they can use that lift and that bay to do a transmission overall, or in this case, more body work or something like that?” 

The bill messes with market forces and prevents small businesses from maximizing their profit, he said. 

Paxton argued that most people in the insurance industry are small businesses as well. He said insurers also have rising costs from disputes, such as rental car fees. He said consumers also get frustrated the longer a dispute goes on. 

He continued to say that insurance companies are restricted in the free market because they are forced to work with “bad actors” if the consumer wants to work with that business. 

“Remember, in the free market, the insurance companies would have a choice where that car goes,” Paxton said. “The insurance companies do not.” 

Higher costs for storage fees mean higher premiums for consumers, he said. 

“If we reduce some of these costs, everybody’s rates go down,” Paxton said.

Paxton also admitted that multiple things are raising insurance rates. He added that legislation could control this one cost to help lower rates. 

Insurers are expected to continue to raise premium rates in 2024 after doing so for multiple years. 

The companies claim pandemic losses from part delays, rising labor costs, and used car values are why they’ve hiked rates in recent years. The rate hikes continually receive criticism from consumer advocacy groups who’ve claimed insurers are overstating needs and overburdening the consumer

Shellem added that there are many reasons insurance rates are increasing, including an increasing complexity of vehicle components, such as the use of advanced driver assistance systems (ADAS). 

Sen. George Young (D-District 48) said one of his constituents mentioned the elevated cost of storing electric vehicles (EVs). 

“There is a difference in storing an electric vehicle,” Young said. “He felt this bill would limit his ability to recoup costs.” 

Jett elaborated that damaged EVs carry a risk of fire

“To take precautions, you’ll have a space allocated for those electric vehicles, and every single space around that has to be empty so that if they catch fire, they don’t catch fire to the facility and every other vehicle around them,” Jett said. 

Paxton said he thought about EV needs when writing the bill. He said the storage price was raised in the bill to partly account for the rising use of EVs in the market. 

Before voting no on moving the bill to the Senate, Jett said his most significant concern was the bill’s impact on the free market. 

“Anytime the government comes and tries to fix something, usually it creates an artificial restriction that causes cascading problems,” Jett said. 

He said adding restrictions on the market was like “throwing the baby out with the bath water.” 

“I’m concerned about restricting a good actor’s ability to have control over a good business,” he said. 

Senators Bill Coleman (R-District 10), Jessica Garvin (R-District 43), Warren Hamilton (R-District 7), Matthews, Dewayne Pemberton (R-District 9), and Tom Woods (R-District 4) voted to move the bill to the Senate. It received three no votes from Senators Jett, Prieto (R- District 34) and Young. 


Photo courtesy of Tashka/iStock

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