Washington Repair Shop Faces Insurance Battle Over Unpaid Vehicle Costs
For over a year, a totaled vehicle has remained at Jeff Butler’s auto repair shop, Haury’s Collision & Vintage, in Washington State. The source of the problem? Safeco/Liberty Mutual’s refusal to pay costs associated with the claim, according to Butler.
“Like all repair facilities and tow yards, we charge for storing vehicles as we have limited parking/storage and are unable to receive more vehicle repairs when our space is taken up,” Butler stated in a letter to Washington State legislators. “Vehicles sitting around not being repaired drive up our overhead expenses and hurt our ability to conduct business significantly.”
Butler sent the letter to legislators on Friday, urging auto insurance reform to safeguard businesses and the public against what he describes as “unfair and deceptive practices” employed by insurers through photo estimating, artificial intelligence (AI), and virtual claim processes.
The Case of the Unpaid Claim
According to the letter, the vehicle was brought to the shop for repairs in 2022 after a collision. An initial estimate was completed, which, along with documentation, indicated potential frame and structural damage. This necessitated further assessment on a frame bench. A detailed list of shop charges, including vehicle storage costs, was then sent to Safeco/Liberty Mutual.
Safeco/Liberty Mutual contested Butler’s estimations, presenting an estimate thousands of dollars lower. The insurer did not provide a reason for the discrepancy, which Butler contends violates a state law. Washington Administrative Code 284.30.390 mandates that insurers disclose the reasons if their estimates are lower than those provided by the policyholder.
Prior to the vehicle being declared a total loss, the vehicle owner made seven attempts to request a third-party appraisal, as outlined in their insurance policy’s appraisal clause. After several months of Safeco failing to honor the clause, the customer authorized the shop to commence repairs, assuming out-of-pocket expenses.
“To our customer’s credit, they recognized Safeco was acting in bad faith and flagrantly violating the unfair claims practice rules,” the letter said.
During a structural inspection, the shop uncovered frame and structural damage to the vehicle and updated the repair plan. Safeco subsequently declared the vehicle a total loss based on the shop’s documentation.
The declaration came three months after the vehicle was initially brought to the shop. The vehicle’s title was transferred to Safeco, and the company instructed the customer to contact the shop to “release interest” in the vehicle, the letter said.
“Even though Safeco caused months of delays and significant costs for labor, diagnostics, and storage charges, Safeco tried to avoid paying for these costs and told their insured it was going to take those costs out of their insured’s vehicle value settlement,” the letter said. “Even worse, Safeco tried to force their insured to ‘owner retain’ their vehicle against their will and refused to have the vehicle removed from our shop leaving the vehicle owner to pay the costs for Safeco’s bad faith claims handling and delays.”
The customer enlisted a claims expert to help, which led to more months of negotiation. Finally, Safeco agreed to pay the full value of the vehicle without deducting shop charges or the salvage value, the letter said. However, the vehicle remained at Butler’s shop.
“At this point, Safeco had transferred the title of the vehicle into its own name,” Butler writes in the letter. “Even though Safeco knew the circumstances surrounding the title and the lien against it when they acquired it, Safeco demanded our repair facility accept Safeco’s offer for about 20 cents on the dollar or they would illegally abandon the vehicle on our property.”
Butler refused the offer and had his lawyer send multiple letters to the insurer, demanding the vehicle’s removal and payment for five months of storage.
“We have attempted to file a chattel lien on the vehicle and filed the correct paperwork with the Department of Licensing, but Safeco has refused to cooperate and has declined our requests for the title, so we are prevented from selling the vehicle to remove it from our lot. More than a year has passed with no resolution in sight,” the letter stated.
A chattel lien allows service providers or material suppliers for a vehicle to gain ownership if they haven’t been compensated.
Butler noted in the letter that he believes his only option is to file a lawsuit against his customer, creating a difficult situation.
“We have no recourse against Safeco for bad faith claims handling as we are not a policyholder,” the letter said. “The insured would then have to sue Safeco for bad faith claims handling. While we don’t want to have to do this, we very well may be forced into it due to Safeco’s refusal to pay the costs as well as provide the title for the vehicle.”
Butler emphasized that abandonment of the vehicle also violates the law. R.C.W. 46.55.230 designates it as a gross misdemeanor to abandon a junk vehicle on a property. “If a junk vehicle is abandoned, the vehicle’s registered owner shall also pay a cleanup restitution payment equal to twice the costs incurred in the removal of a junk vehicle,” the law states.
Liberty Mutual, the parent company of Safeco, did not provide a comment to Repairer Driven News when asked.
National Concerns Regarding Insurance Practices
Auto repair shops in other states have previously alleged that Safeco/Liberty Mutual utilizes tactics to “intimidate” them into reimbursing the company for expenses like rental car fees and storage. Shops have reported receiving collection agency letters demanding reimbursement for claims previously paid by the insurer.
Butler stated in his letter that despite Safeco’s alleged lawbreaking, he is unable to find recourse through state departments. He urged legislators to empower the Washington’s Office of the Insurance Commissioner to fine or sanction insurers based on factors of each individual claim.
“I believe Safeco’s actions go far beyond unfair and deceptive,” Butler said. “They appear retaliatory and punitive in nature. The message Safeco is sending to repair shops appears to be that Safeco is above the law and that the repair shops are required to simply “take it or leave it”.”
Another of Butler’s clients has been embroiled in a seven-year legal battle with their insurance company over low estimates and storage fees. Meliha Jusupovic filed a lawsuit against Integon and Nationwide Appraisals to recover storage costs and other expenses associated with a 2016 claim when her car was rear-ended.
The insurance company also contested estimate costs for months before ultimately totaling the vehicle. The company then refused to pay $10,000 in storage fees or remove the vehicle, as reported by RDN previously.
Storage fees reached $165,000 when the lawsuit was initiated earlier this year. Butler said Tuesday that the suit is scheduled for trial in February.
Similar Issues Across the Nation
Other repair shops across the country have voiced similar concerns related to storage costs. Andrew Batenhorst, who manages Pacific BMW Collision Center in California, told Repairer Driven News in May that he’s seen cases where drivers were saddled with storage fees after their insurers refused to cover his shop’s standard daily rate.
In one case, an insurer refused to pay the required fees for a totaled car parked on the shop’s lot, claiming the “total loss charges were unreasonable,” Batenhorst told RDN. After the company consulted with the California Bureau of Automotive Repair (BAR), he received a call indicating that his charges were reasonable. BAR uses LaborRateHero data to verify storage rates in each market.
According to LaborRateHero, storage fees average $224 per day, and can be as high as $350 per day in Glendale, where Batenhorst’s shop is located. Pacific BMW charges $250 per day, but the insurer, Farmer’s Insurance, was only willing to pay $175 per day.
In this case, the insurer did pay Pacific BMW for its storage fees but then deducted the difference in cost from the vehicle owner’s total loss settlement, Batenhorst said.
“The customer then was punished in this case,” he said. “There really needs to be a law created to stop the customer from being punished for the lack of a law existing.”
