The National Highway Traffic Safety Administration recordsapproximately 16 million traffic crashes in the U.S. each year,resulting in 10.9 million tows. Expenses related to towing andstorage of these vehicles in 2010 was $412 per claim, or about $4.5billion a year. It follows that abusive towing practices can causemajor insurance headaches.

Abusive towing involves a wide range of misconduct, includingexcessive or unbundled fees, failing to notify vehicle owners abouta tow, failing to provide information about where the vehicle isbeing stored, lack of standards for statements or receipts andintentionally vague language or stalling surrounding releaseprocedures. Corrupt towing is often compared to a hostage situationbecause vehicle owners are left stranded and mis- or un-informed.According to the National Insurance Crime Bureau (NICB), reportedfraud incidents doubled between 2009 and 2010.

A recent special report by the Property Casualty InsurersAssociation of America (PCI) worked to bring these suspicious andunlawful practices to light. PCI found that Chicago, Philadelphia,New York, Atlanta and Houston are cited the most for aggressivetowing practices. The most malicious problems for both motoristsand insurers include:

• Inflated towing and storage fees
• Inconsistencies and difficulties related to the releaseprocess
• Unclear or ineffective communication from companies
• Withheld or delayed access to vehicles for adjusters andowners.

Insurers cited issues involving negotiating or disputingcharges. In some areas, certain towing companies monopolized themarket or had special relationships with local lawenforcement. Agents found it hard to inspect vehicles due tothe lot parking them very close together or having limitedoperating hours.

Regulation of towing companies is the central issue. Whilestates completely regulate “non-consent” towing, they cannot do thesame for “consent” towing. PCI offers some suggestions foreffective local regulation:

• Itemized statements for all towing and storage services
• No exaggerated charges or exorbitant fees (such as charges formoving a vehicle from one place to another within afacility)
• Require release of vehicles to an insurance representative whenthe owner provides consent
• Notify vehicle owners and insurers within 24 hours of theinitial tow
• Estimates of towing expense prior to consent tows
• Disclosure of hours of operation, address of facility andcontact numbers to insurer and owner.

These suggestions will assist local lawmakers and regulatorswith improving the transparency of towing facilities and minimizingthis half-billion dollar issue.