06/01/2018

CTTA Improves CA Towing Legislation and Will Co-Sponsor AB 2392 with Insurance Industry

After months of negotiations, CTTA is pleased to announce that it has agreed to co-sponsor AB 2392 (Santiago), a bill originally introduced by Assembly Member Miguel Santiago (D-Los Angeles) at the request of the insurance industry to address abusive practices in the towing industry.  CTTA would like to thank its T-ROC (Towing Regulatory Oversight Council) for their dedication and hard work on this bill, which if left unattended, would have dramatically impacted each California towing company’s business in a very negative way.

After the bill’s original introduction in February 2018, the T-ROC immediately began work dissecting the bill line-by-line to detect problematic provisions and, where appropriate, identify workable alternatives to present to the bill’s proponents and author.  Subsequently, the T-ROC successfully spearheaded the negotiations with the following stakeholders on the bill, each of whom had a different vision for how to “fix” the towing industry:

• The insurance industry (the American Insurance Association and the Personal Insurance Federation of CA, which is comprised of individual insurance companies including Allstate, State Farm, Mercury, Progressive, Liberty Mutual, and Nationwide, amongst others – many of which have their own lobbyists at the Capitol);
• Consumer advocates (ACLU, Western Center on Law & Poverty);
• Other impacted industries (CA New Car Dealers Association, California Autobody Association)

A compromise was ultimately reached and the bill was amended to address the T-ROC’s primary concerns.  Through these negotiations the T-ROC was able to enact the following positive changes to the bill:

• Eliminated a provision that would have reduced the time period during which a tower can charge a storage fee of a legal owner from 15 to 5 days;
• Tied “reasonable” rates to law enforcement/governmental entity or other comparable rates in the same locale rather than a fixed statewide rate or other unfavorable standards;
• Rejected a proposal to require towing companies to accept a payment plan for its fees;
• Eliminated a requirement that tower look in the vehicle to find insurance info;
• Reduced 3-hour minimum inspection time for insurers to 45-minute consecutive increments in order to serve other customers in the queue;
• Established that certain fees authorized by a governmental entity are not unreasonable.

As amended on May 25^th, AB 2392 would enact the following changes that would go into effect on January 1, 2019:

• Requires all towing and storage fees charged to a legal owner of a motor vehicle to be “reasonable” when those services are performed as a result of an accident or recovery of a stolen vehicle
• Considers the following reasonable in this context:
  • The fees do not exceed the rates charged for similar services provided in response to requests initiated by a public agency, including, but not limited to, the CHP or local police departments;
  • Or the fees are comparable to storage-related rates charged by other facilities in the same locale.
• The following rates are considered unreasonable, unless authorized by a governmental entity:
  • Administrative or filing fees; Security fees; Dolly fees; Load and unload fees; Pull-out fees; and, Gate fees, except when the owner or insurer of the vehicle requests that the vehicle be released outside of regular business hours.
• Provides that an insurer must be allowed to inspect a vehicle for 45-minute consecutive increments without paying a fee.
• Provides that an insurer can pay the storage and towing fees with an insurer’s check.
• Outside of normal business hours a storage facility must provide a telephone number that permits the caller to leave a message.  Calls to this number must be returned no later than six business hours after the message has been left.

The bill was passed off the Assembly Floor with bipartisan support on May 29^th and will now head to the Senate where it must be passed by June 29^th.