States experiment with how to address towing and storing abuses
Auto insurers have engaged in the discussion, particularly on how abusive practices impact the cost of emergency towing and storage following highway accidents. The industry is interested in predictability, for the purposes of setting rates, and in making sure their customers aren’t unnecessarily aggravated.
Insurers also are concerned that claims adjusters can gain access to stored vehicles and that owners and operators be able to collect personal belongings, which may be insured as contents. Fees charged to regain custody of a vehicle often are neither itemized nor substantiated. And towing agreements that bind customers to have repairs made by a facility connected with the towing company also can come into conflict with insurance contracts.
Earlier this year, the Property Casualty Insurers Association of America conducted a survey of 448 insurance company employees responsible for evaluating or paying towing and storage charges. It found that excessive rates and fees for removal are the industry’s top concern with towing industry practices, followed by excessive storage fees. Practices that make it difficult to recover the vehicle, its cargo or personal items also made the list. PCI cited Texas, Illinois, California, Pennsylvania and New York as the top five states most in need of reform of their towing regulations.
The issue came up last year in Pennsylvania’s largest city, as Philadelphia Councilwoman Maria Quiñones-Sanchez sponsored legislation, cleared by the city council in a 15-1 vote, that prohibits tows from private parking and driveways unless the vehicle has been ticketed by the Philadelphia police, other law enforcement or the Philadelphia Parking Authority. The bill, which does provide an exemption for vehicles illegally parked at hospital facilities, came in the wake of news reports detailing numerous scams by local towing companies, including the use of movable signs and videos of tow trucks pushing vehicles into illegal spaces before hauling them off at $175 a pop.
But even in states that already have taken action, some abuses persist. Despite a statewide law passed in 2007, Portland, Oregon, recently has seen reports of vehicles removed from legal parking places merely because the cars have backed into the spaces assigned.
Among the venues where abusive towing and storage practices have come up for debate is the National Council of Insurance Legislators (NCOIL). NCOIL hasn’t yet been able to gain agreement on a model law to deal with towing, in part because the current draft fails to include a number of consumer protections that states have explored to address the issue. One provision the insurance industry is pushing as part of a model law comes from an Ohio law that allows both insurer representatives and owners to bring private actions for excessive or unsubstantiated charges and fees.
In 2014, Ohio instituted an arbitration process and required towing organizations to allow access to personal belongings in a towed vehicle without charge, absent a criminal investigation. If successful in the arbitration process, a towed customer can recover double the cost of the tow. In cases where safety of the tow-truck driver is not a factor—as may often be a concern with emergency roadside service—the Ohio law requires a picture clearly showing a violation to remove a vehicle from private property.
Another legislative initiative that was considered in Indiana, until it failed to pass the state Senate earlier this month, would prohibit fees for inspection of the vehicle by the owner or an authorized insurance representative during regular business hours. It also would proscribe storage fees for any day during which the vehicle could not be reclaimed under procedures set forth in the proposed statute.
Supporters of NCOIL’s proposed bare-bones model argue that each state should have the chance to build their own requirements that address the perceived abuses within their own jurisdiction. Opponents tend to see the current draft as ineffective in addressing the issues on the table.
Reasonable regulations for towing should acknowledge that it represents an unusual market, where one party’s bargaining power often is severely restrained. Allowances must be made for situations where drivers have simply abandoned vehicles. Finding the right balance of interests between towing companies and their often-unwilling customers has produced some good models on specific issues, but not yet a national consensus on what is fair and reasonable. The laboratories of democracy may have to churn a while longer to get there.
Image by CrispyPork