An insurance industry-backed California bill to create a new regulatory board for towing and storage companies under the California Department of Consumer Affairs has drawn opposition from the auto body industry.
Assembly Bill 294 was introduced by Assemblyman Miguel Santiago, D-Los Angeles, in January, and is sponsored by insurance companies.
The bill, also known as the Vehicle Tow and Storage Act, would establish the Vehicle Towing and Storage Board in the Department of Consumer Affairs and would empower the board to regulate and resolve disputes involving vehicle towing businesses.
The bill would also require a business to obtain a vehicle tow and storage permit and pay an annual fee before operating a tow truck or tow vehicle in California. It would establish various penalties for violations of these provisions.
The bill is being opposed by the California Autobody Association.
Jack Molodanof, a lobbyist for the group, says the bill shouldn’t include auto body shops, which are already heavily regulated by the Bureau of Automotive Repair, and that it prohibits auto repair shops from charging reasonable rates for storage.
“This new board is overly broad and would capture automotive repair dealers that charge ancillary storage,” he said.
These ARDs are not in the towing and storage business, he noted.
“The auto repair industry is in the business to diagnose, perform maintenance, repair vehicles and are regulated by BAR,” he said. “Storage service is ancillary to auto repair shops, but usually only comes into play on total loss vehicles or when a customer does not pick up and pay for authorized repairs in a reasonable amount of time. If an ARD is charging unreasonable storage rates or an issue arises regarding storage, a consumer can file a complaint with BAR to investigate.”
A spokesperson for Santiago’s office did not reply to a request for comment, nor did the American Property Casualty Insurance Association.
In the case of possible total-loss vehicles, BAR does not allow an auto shop to charge storage on a vehicle while it is under repair, which includes performing an initial teardown and diagnostic work to prepare an accurate estimate.
Molodanof explained that the customer must authorize this work before it is started, and if the customer does not authorize the teardown, or the shop believes the car is an obvious total loss, storage charges are allowed. Storage charges may accrue once the tear down estimate is complete and the customer is notified, but it rarely accrues if the car is ultimately repaired, he added.
“Once any of the above conditions are met, it is up to the insurer and the vehicle owner to make the decision to repair the car or declare it a total loss,” Molodanof said. “The problem is that insurers delay in making that decision for long periods of time causing storage fees to increase unnecessarily. We believe that insurers are trying to cap storage rates to make up for their own inefficient total loss settlement processes.”
The bill is next set to be heard in the Assembly Committee on Transportation.
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