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American Honda will, from time to time, place collision industry magazine articles at this site addressing news, issues, and trends that could be of interest to consumers.


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Wednesday, August 22, 2012

PCI Offers Solutions to Curb Towing and Storage Abuses

The Property Casualty Insurers Association of America (PCI) has published a report focused on unscrupulous towing and storage practices with suggestions on how lawmakers can improve the situation.

"Abusive towing and storage practices cost vehicle owners and their insurers over a half a billion dollars each year," said Bob Passmore, PCI's senior director of personal lines policy. "Costs are expected to continue to grow if no action is taken, resulting in higher out-of-pocket expenses for owners and increasing insured loss costs that may translate into higher premiums."

PCI notes that, although the vast majority of towing firms are honest and well-intentioned, some engage in abusive business practices designed to increase towing and storage charges. The PCI Special Report provides analysis on the costs of abusive practices and identifies where these practices are most prevalent. In addition, the report offers potential solutions that PCI says would help lower towing and storage costs for consumers and provides tips for helping motorists retrieving their vehicles.

The report estimates that 10.9 million passenger cars and light trucks are transported from the scene of an accident by a tow truck each year. According to the report, the average crash-related towing and storage fee in 2010 was $412 per claim ($228 for towing and $185 for storage), translating into a total nationwide cost of towing and storing damaged or disabled vehicles of about $4.5 billion a year.

On a nationwide basis, PCI estimates the total excess and unnecessary amount of towing and storage charge to be about $570 million a year, accounting for 13 percent of the total annual towing and storage costs.

The PCI 2011 Member Company Survey on towing found that in descending order, Chicago, Philadelphia, New York, Atlanta and Houston are the five cities cited the most for aggressive towing practices. That survey also identified the five states with the most aggressive towing practices, in descending order, to be Illinois, Pennsylvania, New York, New Jersey and California. These states' combined property damage liability and collision loss cost is 21 percent higher than all other states ($300.17 compared to an average of $248.51 in other states).

To solve the problem, the report suggests implementing new laws to regulate "consent" towing situations, where the owner has the opportunity to select their towing company, as opposed to situations, such as illegally parked vehicles, where a third party selects the towing operator (non-consent tows).

A sampling of their suggestions include:

  • Require that vehicles be released from a towing or storage facility to a properly designated insurance representative with proper consent
  • For non-consent tows, there should be limits on the distance that a vehicle is towed. For consent tows there should not be a limit on the distance
  • Itemized statements for all towing and storage services provided.
  • No storage charge on days when the facility is not open for vehicle recovery.
  • Disallow "contrived" charges such as vehicle access and inspection charges or charges for moving a vehicle from one place to another in the same facility.

 

Copyright 2012 CollisionWeek (www.collisionweek.com) – reprinted by permission from the publisher

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