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Tuesday, 01 May 2007 14:47

CAA battles against insurer lawsuits regarding storage charges

    The meeting between the California Autobody Association (CAA) and Insurance Commissioner Steve Poizner was the focus of Legislative Day at the Capitol on March 27. The four main points that the CAA executive committee covered with the Commissioner and his department were discussed. The points included consumer choice and steering, capping of paint and material costs, auto body labor rates and surveys, and enforcement of laws and regulations.
    “As usual, our members were very prepared to talk to their legislators about important issues in the collision repair industry,” said David McClune, CAA Executive Director. “We laid out the issues and asked our legislators to help us reinforce our message to the Department of Insurance.”
    The CAA asked that the DOI aggressively enforce Insurance Code section 758 B (2) (c) that prohibits insurers from steering after the consumer has chosen a repair shop.
    Shop owners also brought up the illegal practice by some insurers of placing an arbitrary "cap" on what they will pay for paint materials. The Department has previously indicated that an arbitrary cap by insurers is illegal. The CAA asked that this issue be addressed and resolved as soon as possible.
    The CAA has pushed for revised guidelines on determining the auto body labor rates in a geographical area. CAA has worked with the Department to structure a way to devise fair and accurate labor rate surveys. The CAA believes the Department has a duty and responsibility to review and determine whether the surveys are reasonable.
    The CAA would like to see the department use the existing insurance code statutes as well as the fair claims settlement practices to enforce many of these issues. Those in attendance asked their legislators to assist with these issues by sending a letter to the commissioner to ask him to look into these matters. One legislator suggested a joint letter to sign on with group support, in an effort to send a strong message to the department.
    CAA members have gone to Sacramento for this annual event for the last 40 years to meet with their state representatives. {mospagebreak}
Insurers file suits on storage charges
    CAA has been very involved in the issue of some insurers trying to reduce claim costs by limiting the amount they will pay in vehicle storage charges. Some insurers are erroneously using a section of the civil code that applies to finance companies and not to insurance companies that deal with lien sales and repossessions. They have attempted to cap the storage charges at a maximum of $400.
    The correct statute dealing with insurance company payment of towing and storage charges is section 22524.5 of the vehicle code. This statute basically says that the insurer is responsible for ordinary and reasonable towing and storage charges. Last year, some of the CAA members received letters from some insurers stating that they might take legal action on storage charges that were paid in excess of $400, and demanded the excess amount be paid back. After calling the CAA, many of the shops responded to the insurers in writing and addressed the correct section of the vehicle code to explain why they did not owe it.
    Now, some insurance companies are suing shops in Superior Court under this mistaken law. The few known cases have gone to arbitration and have been settled in favor of the shop.
    Unfortunately, CAA said, these lawsuits might continue because in most cases it is more expensive for the shop to fight the case, and the insurance companies know this. CAA is getting involved in addressing this issue and is looking at various options, including a meeting with the Attorney Generals office. If your business has been involved with this type of case, please call the CAA state office, (916) 646-8111.
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