Liberty Mutual Insurance Co. determined a 2011 Ford Edge was a total loss in early July after a North Carolina collision shop estimated the cost to repair it at $7,199, but more than seven months later, the vehicle still sat at K&M Collision. 

As each day passed, the $75 per day storage fee was added to Liberty Mutual’s bill. As each month passed, the bill grew by thousands. 

Michael Bradshaw, K&M Collision vice president, said his shop made multiple attempts to notify Liberty Mutual about the rising bill attached to the vehicle sitting on their property. Eventually, the business filed a complaint with the North Carolina Department of Insurance (NCDOI). 

“They just figured they would leave the car and abandoned it,” Bradshaw said Monday. “We made multiple attempts over three or four months. They basically ignored us until there was a complaint filed.” 

NCAC 04 .0418 requires insurers pay all reasonable towing and storage charges until three days after the owner and storage facility are notified in writing that the insurer will no longer reimburse for the charges. 

Bradshaw said he knew the law and he knew the NCDOI enforced it. 

“You can’t be in business and not know this stuff because it is too costly,” Bradshaw said. “They were taking advantage of the fact that too few shops know what their rights are and how to assert those rights. They are bullying shops into taking what they say.” 

According to a report sent to NCDOI by Liberty Mutual, the claimant was traveling on I-40 on May 3 when a Liberty Mutual policyholder swerved into her lane, striking and damaging the Ford Edge. 

The insurer said it accepted liability for the claim on May 11. Liberty Mutual provided a preliminary repair estimate of $2,694 at that time, the report said. 

The report says the vehicle was brought to K&M Collision on June 18 for repairs. The insurer determined it was a total loss on July 5. 

Liberty Mutual also states in its report that the claimant disputed the total loss settlement. The insurer then says it issued a failure to settle notice to the claimant and noted a stop storage date of July 27. 

However, Bradshaw said the company never sent a stop storage notice to K&M Collision. Liberty Mutual’s report also notes a “lack of stop storage” sent to the shop.

On Feb. 23, Liberty Mutual paid K&M Collision a total of $18,732. The remaining balance was for vehicle teardown, administrative fees and tax. 

“There’s a lot of other cases where this would have happened in other shops and it would have went unresolved or they would have accepted pennies on the dollar of what they were owed,” Bradshaw said. 

He said this is the third complaint he has filed against Liberty Mutual within 18 months. Overall, his shop files six to eight complaints annually. It also directs consumers to NCDOI if they have any issues, he said. 

Bradshaw said shops have to advocate for their own rights but states also need insurance commissioners who will listen. 

“Our commissioner has a background where he understands the relationship between collision repair and insurance companies and he understands how insurance companies are trying to take advantage of repairers,” Bradshaw said.

Following resolution of the complaint, Bradshaw said Liberty Mutual sent a collection letter to his business. 

“They send a collection notice after the fact and make you feel like you’ve done something wrong,” Bradshaw said. 

Multiple repair shops reported last year that they received collection letters from Liberty Mutual following the settlement of total loss claims. 

Sean Gillette, director of collision repair operations at Rickenbaugh Cadillac Company in Colorado, previously said his shop has on multiple occasions received collection notices from Liberty Mutual or Safeco, owned by Liberty Mutual. 

He found out that the claims against him were not legit and threw the letters away. 

“As always, activities like this target the most at risk, those that are hanging on by a thread and may not fully understand their state and local laws and why this may be happening,” Gillette said. “They may be sufficiently scared enough to pay based on the wording and scare tactics employed by the collection agency.”

In Washington state, Jeff Butler, owner of Haury’s Collision & Vintage, has used the story of an abandoned vehicle from Safeco Insurance to advocate for change in the state. 

Butler described a totaled vehicle abandoned on his property for more than a year via a letter he sent to legislators in December demanding for legislation that would protect repair shops. 

“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. “Vehicles sitting around not being repaired drive up our overhead expenses and hurt our ability to conduct business significantly.”

Butler said Tuesday that Safeco continues to engage in the practice of abandoning vehicles in the state. 

“Safeco is refusing to pick up total loss vehicles where they delay the claim, fail to conduct a reasonable investigation, all the while denying the shop’s estimate,” Butler said in a text. “These actions drive up the costs and then Safeco refuses to pay and abandons the vehicle.” 

HB2011 and its companion SB6252 were filed in Washington following Butler’s letter. The bills would require a right-to-appraisal clause in all insurance policies in the state of Washington. Neither of the bills has seen movement since mid-January. 

A recently filed bill, AB1901, in California, also aims to address abandoned vehicles by giving “salvage pools or occupational licensees” an avenue to take ownership of a vehicle. 

“The insurance company shall provide the salvage pool or occupational licensee of the department with notice authorizing the release of the vehicle to the vehicle’s registered and legal owner or lienholder,” the bill says. “This notice may be sent by mail, electronic mail, or a proprietary electronic system accessed by both the insurance company and the salvage pool or occupational licensee of the department.” 

The salvage pool or licensee should then send two notices to the registered legal owner and any lienholders that the vehicle is ready for pickup, the bill says. 

 “The notice shall inform the owner and any lienholder that the registered and legal owner or lienholder has 30 days from the date of the first notice and 14 days from the date of the second notice to pick up the vehicle from the salvage pool or occupational licensee of the department before the vehicle is deemed abandoned,” the bill says. 

If the vehicle is not picked up during the timeline written in the notices, the vehicle will be deemed abandoned and the title assigned to the salvage pool or the licensee, the bill says.

Legislation in Oklahoma is the opposite of other bills seen nationally. Instead of regulating insurers, it would benefit companies that prolong claim settlement processes. 

Oklahoma bill, SB1741, filed by insurance agent Sen. Lonnie Paxton (R-District 23), would put a cap on towing and storage fees. The bill made it out of the Senate Retirement and Insurance Committee late last month. 

It would extend the State’s Corporation Commission’s ability to set towing and storage fees for non-consensual towed vehicles to include consensually towed vehicles. Outdoor towing rates would be capped at $24 to $55 and indoor storage rates at $39 to $70. 

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. 

In a February hearing on the bill, multiple Senators noted reports from repair shops where insurers were prolonging the claim’s process, ultimately costing repair shops forced to store the vehicles. 

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.

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