A recent study by the Property Casualty Insurers Association of America (“PCI”) is casting two Texas cities in a very negative light. The 2018 PCI Towing Survey Analysis (the “Study”) states that abusive vehicle towing and storage practices “cost consumers millions of dollars every year.” This study, which was conducted by PCI and surveyed 448 member company employees, found that Houston was at the top of their list of “abusive practices” and Dallas was a close second. Unsurprisingly, having two of the largest cities in the state included in their list placed Texas as number one on their list of states that need “pro-consumer” reforms, followed by Illinois, California, Pennsylvania, and New York.
While the Study itself was not published, PCI did publish a “summary” of the Study and issue a press release. The summary lists several goals that are designed to curb towing abuses. Those included:
1. Eliminating federal preemption of state regulation on accident and breakdown towing.
2. Require invoices to be itemized to list charges on all tows.
3. Require clear information to be provided to owners and their insurers regarding location and release procedures.
4. Prohibiting “wreck-chasing” tow trucks that arrive at accident scenes when not summoned on rotation / by a peace officer.
Interestingly, the Study seems to have missed or ignored the reality of several very important aspects of Texas towing law and regulation.
As every towing company and VSF knows in Texas, TDLR actively regulates incident management tows, IM towing companies, and VSFs that receive IM towed vehicles. While TDLR does not set a maximum price for incident management towing, it does routinely investigate incident management towing companies regarding their facilities, forms, records, and practices. Texas also allows cities and counties to set limits on towing fees on IM tows. While the “federal preemption” argument existed for a brief time in Texas, to date there have not been any cases that have succeeded in removing (or “preempting”) TDLR’s authority to regulate IM towing. Accordingly, the first proposed change in the Study simply does not apply to Texas towing companies and vehicle storage facilities.
Second, itemization of fees is already required under Texas law. TDLR enacted rules that both require itemization of towing fees as well as the “mirror image” rule that states those fees must match the fee schedule on file with the vehicle storage facility. While some companies may choose to disregard this requirement, they do so at their own risk of enforcement and fines. Thus, the second proposed “needed reform” simply does not apply to Texas.
Third, Texas towing companies in any nonconsent tow are required and strictly regulated on how they provide notice to the vehicle owners and lienholders in the first and second notice letters. While there is no requirement to provide notice to the insurance company, there is also no easy way to locate which insurance company insures a vehicle in Texas. Accordingly, the first portion of this “needed reform” already exists in Texas and the latter “needed reform” cannot occur unless Texas created a publicly-accessible state registry of insurance companies that insure specific vehicles.
Additionally, PCI essentially argues that the burden of notifing an insurer should be on the vehicle storage facility rather than on the party with whom the insurance company has a written contract. This is both inefficient and impractical. It would be far more efficient to place the burden of notifying an insurance company of the location of the vehicle on the person to whom the first and second notice letters are delivered. The vehicle is their responsibility, and the insurance company is free to insert requirements like “notice” of a vehicle being towed into their insurance policy terms. There is no good reason to legislate yet another notice requirement when the vehicle storage facility is already under strict requirements to provide notices containing fees, location information, and release procedures to both owners and lienholders.
Finally, the last “needed reform” is to prohibit “wreck-chasing.” This is another curious reform request because Houston is well-known for its strict rotation policy, which was the subject of litigation due to its impositions. Secondly, most major cities in Texas (and many smaller ones) already have local ordinances that expressly prohibit a tow truck driver from approaching a wreck unless summoned by a peace officer through the rotation. Thus, the last “needed reform” appears to be based on a lack of information by PCI or ignorance of local Texas towing regulations.
PCI did not publish its methodologies in conducting this study. Instead, PCI provided very limited information on how many “member company employees” provided responses and jumped to an uninformed conclusion. PCI’s Study also failed to identify who was providing the responses (i.e. adjusters, other employees at the insurance company) and failed to show what questions were asked of those employees. These are serious concerns as the methodology of any study has a direct result on the level of error in its results and findings. It is also a concern because the study consistently references “consumers” but it appears that not one actual consumer was involved in the study – just insurance company employees. Given that fact, one should consider the source of the information.
At The Walters Firm, we know from personal experience that most towing and vehicle storage companies could easily generate a lengthy list of complaints about insurance carriers and their abusive tactics. Those complaints include “slow-pay” and “no-pay” on stored vehicles (sometimes in the tens of thousands of dollars), abandonment of vehicles at the VSF (mostly junked and worthless vehicles), delivering titles to junk vehicles and assuming that gets the insurer off the hook for towing and storage fees, and many, many more. However, disinformation like the PCI Study garners attention and news outlets have already picked up this story.
If the industry is to properly respond to “studies” like that put out by PCI, it will need to coordinate through trade groups like Southwest Tow Operators and prepare well-researched and well-informed rebuttals. Otherwise, blanket allegations like those made in the Study, regardless of how uninformed they may be, will be the only information that legislators hear when they go into the next legislative session to enact laws that regulate this industry.