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Up a Highway Without a Pedal

The Virginia State Corporation Commission recently passed Administrative Letter 2020-06 (https://www.scc.virginia.gov/getattachment/35193336-78b1-4012-88c2-b34a0eba81e1/2020-06.pdf) which notes that, once insurers have made a liability determination that the insured is at fault for an accident, insurers are responsible to reimburse towing companies for “clean up and recovery costs,” which include “certain towing expenses.”

In many cases, this is a relatively insignificant point. After all, when compared to the property damage and medical bills that can result from an accident, a small tow charge is a relatively minor addition. However, in circumstances where an accident leaves a vehicle disabled on the side of the road, Virginia police are permitted by Virginia law (Virginia Code § 46.2-1209) to call a towing company to recover the vehicle and, depending on the city or county’s local code, these fees may be automatically charged to the owner of the disabled vehicle.

In some cases, neither the insured nor the insurer has an opportunity to meaningfully negotiate the tow rates charged. Although some localities have set rates that the company may charge, in many localities within Virginia, there are no set tow rates (or caps), which can result in bills for tens of thousands of dollars being forwarded to trucking companies and insurance companies that were never negotiated and are incredibly excessive compared to the time and cost expended by the towing company.

Virginia Code § 46.2-118(11) prohibits any towing and recovery operator from “[k]nowingly charg[ing] excessive fees for towing, storage, or administrative services or charg[ing] fees for services not rendered.” However, Virginia Code § 46.2-118 does not have an associated private right of action or embedded right of refusal provision. Instead, parties must rely on petitioning the Office of the Attorney General for a consumer protection complaint, which has no guarantee of being pursued and provides no immediate relief from the outstanding debt.

Drivers, transportation companies, and insurance companies should all be prepared and ready to handle situations when a vehicle they are responsible for becomes disabled. First, as always, drivers should take care to contact their towing company and/or attorney immediately so that they can get ahead of the situation. Second, many (if not most) police officers will permit the vehicle’s owner to select a nearby towing company – and drivers or company representatives should be ready and prepared with a list of reputable companies. This can allow negotiation of rates up front. Third, if a police-recommended towing company is to be used, the driver or company representative should take care to get an estimate in writing prior to work being performed. Fourth, recipients of towing bills called in by emergency services should take care to review those bills to ensure that they represent a reasonable rate for work actually performed. Moreover, different localities may have procedures in place for how these bills are to be handled. If you receive an excessive towing bill as a driver, transportation company, or insurance company, it may be prudent to contact an attorney before payment is made to weigh potential options – it’s typically much more difficult to undo a wrongful payment then it is to address the situation up front.

If you have questions about this article, please contact Matthias Kaseorg (mkaseorg@setlifflaw.com) at 804-377-1273, or Steve Setliff (ssetliff@setlifflaw.com) at 804-377-1261.

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