AIA Says Virginia’s Towing Industry Needs Repairs

June 22, 2005

The American Insurance Association (AIA) testified this week before a legislative panel that the current towing situation in the commonwealth is simply too much like the Wild West and some action is urgently needed.

AIA represents more than 400 insurers that write $644 million in personal automobile insurance in Virginia. While the insurance climate in Virginia for policyholders is generally quite good in terms of low costs and competition, continuing problems reportedly exist for them relating to towing.

“Virginia policyholders sustain emotional trauma when their vehicles are mysteriously towed or when they can’t get ready access to them after they have been towed. In addition, they bear unnecessary expenses as rate payers for unacceptably high towing-related costs,” stated David Snyder, AIA vice president and assistant general counsel, testifying before the before the Virginia Joint Subcommittee to Study the Vehicle Towing and Recovery Industry.

“For example, in one Northern Virginia case, the total towing and storage charges racked up from Friday to the next Monday were $778,” explained Snyder.

Some of Virginia’s neighboring jurisdictions have effectively dealt with similar issues, including the District of Columbia and West Virginia. While AIA does not favor overly intrusive regulation, the fact remains that some additional standards of conduct and reasonable restraints on costs are essential for the commonwealth’s policyholders.

“On behalf of our policyholders, citizens of Virginia, AIA urges the Subcommittee to address these concerns on an urgent basis,” implored Snyder. “These are important emotional and pocketbook issues and they can also be matters of public safety.”

AIA recommended the following priorities for action:

1. As it does for taxi companies, government (either state or local) should oversee the rates charged for towing to make sure they are transparent and predictable and that they are fair and rational. There is no uniform standard for charges, and the cost of the tow can often be only the beginning, with such creative additions as “labor”, “recovery” and other “administrative” fees.

2. Government (either state or local) should set a standard for storage charges and require that they be transparent, predictable, fair and rational. Insurers and their customers are victimized by outrageous “storage” cost add-ons, which are then inflated because access is denied while the storage fees mount. There should be standards for storage fees and mandated minimum hours of access for owners and insurers. In addition, vehicles should be required to be released to insurers or owners upon proper identification.

3. Government should make it easier for customers to file complaints, including: better identification of the towing company on the vehicles; clear signage in parking lots with contact information; a government maintained central complaint repository that would be publicly available, and; a consumer assistance office to resolve disputes.

4. Serious civil and criminal penalties should be provided for consumer abuses. These should include steep fines and license revocation for repeat offenders. An effective enforcement operation should be established by either state or local government.

5. Different forms of payment should be authorized, including at least one national credit card.

6. There is a need to assure that insurers are not charged for stolen and recovered vehicles that are towed.

7. Emergency tows under police direction should be rotated among companies meeting all regulatory standards and having good complaint histories.


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