When a claimant’s vehicle (in this case, a high mileage 1994 Chevrolet work van) is involved in an accident and is estimated
and determined to be a total loss, who is responsible for the storage
fees? The claimant was unable to get insurance information at the time of the accident and decided to retain a lawyer. It took months for the lawyer to get the claim to be accepted and settled. Then, we got several phone calls from the salvage pool inquiring on storage charges, tow bill and any fees. Then, the vehicle sat for another week and a half with no activity. I inquired with the at-fault insurance company as to when they were going to pick up the vehicle in question, and I received an e-mail from a claim representative that stated, “I settled this claim with the claimant’s attorney as owner retain.” Further questions I have include:

• How can an insurance company settle without the shop being involved?
• How can the insurance company claim no responsibility for storage fees?
• The insurance company states that the storage fees from the date of loss to the date of contact by the attorney are also not their responsibility. Is that legally correct?

Asked by Tom Ferguson, Lindan Auto Mechanical & Body Shop, Merriam, Kan.

Great question, Tom. However, without knowing your state’s specific rules and statutes governing your rights, I can only offer generalities which should not be construed as legal advice.

If you have a signed repair order, the customer is responsible for storage charges, and it appears the insurer has more or less abandoned the vehicle. This may be illegal in your state and you may have a right to collect, but…you may need to meet certain requirements of time and procedures. You need to get an auto title company or attorney familiar with such processes to assist you as there may be certain procedures that need be undertaken within a certain time frame to perfect a lien or have the right to collect storage charges, etc.

I wouldn’t count on any assistance from your customer’s attorney, as he should have made contact with you before accepting a settlement (that likely came with a release of all claims) that may have released the insurer of such responsibilities. You may have to seek recovery from your customer…but again, legal assistance may be worth the effort on this and future issues.

I once collected over $36,000 in storage fees when an insurer attempted to abandon a vehicle at my shop, but it took legal counsel to assist me.

To answer your specific questions:

Q: How can an insurance company settle without the shop being involved?
A: Because the insurer doesn’t owe you!

Q: How can the insurance company claim no responsibility for storage fees?
A: Because the insurer doesn’t owe you and they don’t really care about you or your company. They may very well have a responsibility…unless the attorney had his client sign a release! Your customer owes your company.

Q: The insurance company states that the storage fees from the date of
loss to the date of contact by the attorney are also not their
responsibility. Is that legally correct?
A: I’m not an attorney, but I know that their statement is not totally accurate. But you need to understand the big picture here: the at-fault party’s insurer doesn’t owe you or your customer anything. Nothing, nada, zip, zilch. The party who struck your customer owes your customer (under restatement of torts) for all damages that flowed from the loss they caused through their negligence.

The at-fault party’s insurer owes to protect their policyholder up to the amount of their liability coverage…not you or your customer! The only way to get the interest of the other party’s insurer is to place their insured (the at-fault driver) in harm’s way (“risk”), whereas the insurer has potential obligations to defend or face liabilities (“risk”) if they don’t…up to the limits of their liability coverage.

Your best bet is to go after your customer. And if their attorney signed off a release and left them vulnerable to your claim, the attorney may have some explaining to do.

Get to know your state’s regulations and statutes regarding garageman or garagekeeper liens, mechanic liens and/or possessory liens, etc., as there may be protections in place for you. But do it soon as time restrictions are often present. This will also enable you to prepare and put in place policies, procedures and precautions for the future.