California Bureau of Automotive Repair (BAR) recently held its third, and likely final, workshop to discuss proposed regulations on storage and towing fees that will impact collision repair shop operations in the state. 

The passage of AB1263 last year gave BAR the authority to address storage fees, according to BAR documents. It also allows the bureau to codify its guidance and unify existing law on the subject. 

Collision repair industry representatives voiced concerns about the regulation creating a public database that will provide median and average storage rates by radius, a requirement of shops to allow a minimum of three days for authorization after teardown before charging for storage, and wording in the regulation that would force shops to use public storage or towing rates if no repair is completed on a vehicle brought to the shop. 

Bureau Chief Patrick Dorais said, after considering the comments held in the workshop, that BAR will send a proposed regulation to the Department of Consumer Affairs for approval. The proposed regulation will be filed with the Office of Administration where a minimum 45-day public comment period will be held. 

The regulation proposed during the third workshop would require shops to report their maximum daily storage rate to BAR as part of their annual registration process. Any change of the maximum daily storage rate requires written notice to BAR within 30 days of the date of the change. 

BAR would use the rates to create a search tool with the average and median daily storage rates for a given locale. 

Matthew Gibson, BAR executive office program manager, said the tool will look for the closest shops within a 5-mile radius. If there are less than 20 shops in that radius, the tool will expand to a 10-mile radius, he said. If there are less than 10 shops in a 10-mile radius, it will expand to the county. 

Jack Molodanof, counsel for the California Autobody Association, said the tool will be used by insurance companies to set a cap on what they will pay. 

“No insurance company’s going to pay more than the average, it is not going to happen,” Molodanof said. “You know it’s unrealistic and that is the concern.” 

Molodanof suggested that the tool be used internally by the department but not be public. 

“Do your own little internal survey but don’t publish it because this looks like a survey the way you’re doing it,” Molodanof said. 

Erica Williams, Williams Insurance Exchange and counsel for California State Automobile Association Insurance (CSAA) Group, said shops already have to post their storage rates physically at their shops, making them public. She said an online tool allows consumers to research rates before picking a shop. 

“A consumer, like say they’re an elderly consumer that doesn’t have the means to go shop to every shop and shop around, they would have the ability to look online and find out the storage rate median.” 

She also argued that insurance companies wouldn’t place a cap on storage prices based on the median price. 

“As long as it’s close to what seems reasonable for the area, it’s not disputed,” Williams said. “It’s when it’s double, triple, or quadruple the amount that we’re seeing from other shops or nearby ones or if we have information that they’re charging half the amount just because they have a different client or a different insurance company, for instance. That’s when they get pushed back.” 

Williams also noted that it depends on what type of storage is provided for the price. She noted things such as extra security or lights are things that could make a storage cost higher.

Molodanof also raised concerns about a three business day minimum shops would be required to wait after teardown for authorization before starting storage fees. He said that could end up five days if a weekend is in the middle. 

“You are basically saying that the shop has to give away three to five days of storage,” Molodanof said. 

A BAR official responded that the agency is saying the shop needs to give the consumer time to work with the insurance company to determine what’s going to be covered under their policy and what’s not going to be covered. 

Williams responded that the state’s Department of Insurance allows insurers up to six days to inspect a vehicle virtually. 

“I would argue to go higher not lower because then you’re stripping those customers with insurance companies their right to inspection,” she said. 

Molodanof said a part of the regulation regarding vehicles dropped at a shop without a repair shouldn’t be directed to collision repair shops. The regulation says that if a repair isn’t completed, a market storage rate cannot be used. It says a public California Highway Rate storage rate would apply. 

California Highway Rates typically apply to vehicles towed without a consumer requesting the tow. 

“This has gotten twisted where the intent here looks like that if the shop is not going to do a repair for you, they’ve now become a tow truck company,” Molodanof said. 

Molodanof said tow trucks charge their fee and repair shops reimburse the tow company. 

A BAR official responded that the shops shouldn’t take cars if they know they can’t fix them. 

“If they’re in the business of repairing cars and they come in a ball of metal they should politely ask that it be moved somewhere,” the official said. 

Molodanof argued that it’s not always possible to process every vehicle as they immediately come into a shop. 

State officials did say that if a teardown is completed a shop can charge the market rate. 

Williams suggested that the regulation should include vehicles that have completed a teardown. 

Andrew Batenhorst, California Autobody Association Glendale/Foothill Chapter president and Pacific BMW Collision Center body shop manager, gave Repairer Driven News an example in 2023 of how insurers were ignoring requests from shops regarding total loss vehicles drop-offs. 

He explained how even after telling Progessive his lot was full and that a particuliar vehicle was a total loss by looking at pictures, the insurer still brought the vehilce to the shop. It took Progressive another four weeks to determine the vehicle was a total loss, he said at the time.

The insurer then disputed the storage costs and labor time spent communicating with them and on the estimate, Batenhorst said. He eventually negotioed a lower cost as a courtesy.

During the meeting, Batenhorst raised concerns that if the regulation goes into effect it will only put more pressure on repair shops. 

“I have seen many examples in which you guys determine that our rate for storage is reasonable the problem then lies in that you guys do not have jurisdiction over the insurance industry,” Batenhorst said. 

A consumer of Pacific BMW recently filed a complaint with the state’s Department of Insurance after State Farm refused to pay a storage rate that it previously paid at the shop — a rate that Batenhorst says the state has determined is reasonable. However, the state said it wasn’t able to resolve the dispute and suggested the consumer sue State Farm. 

“I don’t think CDI is present at a lot of these workshops and I know a lot of these changes to the regulations are coming from insurance companies. You guys are taking their concerns and consumer concerns to make sure you’re protecting their rights which is important, I  agree, but when you look further down the road after things like this go into play, there’s still a hole in the way that is handled and oftentimes as a shop, we may have to decide to give that money back to the customer if we want to ever have that customer come back to our shop or we roll the dice where we may end up going to court.”

The meeting also received attention from businesses outside the state, with at least one comment given by Jeff Butler, owner of Haury’s Collision & Vintage in Washington state.