HOUSE BILL REPORT

SHB 1130

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Floor Activity:

Passed House: 3/4/13, 97-0.

Senate Amended.

Passed Senate: 4/15/13, 48-0.

House Refused to Concur.

Senate Receded.

Senate Amended.

Passed Senate: 4/24/13, 46-0.

House Concurred.

Passed House: 4/25/13, 95-2.

Passed Legislature.

Brief Summary of Substitute Bill

Allows an impounded vehicle to be redeemed by a vendor working on behalf of the insurer of the vehicle.
Allows an impounded vehicle to be redeemed by a third-party insurer if that insurer has received a claim in connection with the vehicle.
Allows an impounded vehicle to be redeemed by a vendor working on behalf of a third-party insurer if that third-party insurer has received a claim in connection with the insured vehicle.
Expands the group of people who may consent to the redemption by a third-party insurer or a vendor working on behalf of the third-party insurer.

Background:

Tow truck operators who impound vehicles from private or public property, or tow for law enforcement agencies, are regulated by the Department of Licensing (DOL). To be licensed, an applicant must meet financial responsibility standards, provide a list of all employee drivers of a tow truck, pass an inspection by Washington State Patrol (WSP), complete the appropriate forms, and pay the appropriate fees.

Impoundment, the taking and holding of a vehicle in legal custody without the consent of the owner, may only be performed by registered tow truck operators. If on public property, the impound is at the direction of a law enforcement officer; if the vehicle is on private property, the impound is at the direction of the property owner or his or her agent.

Once a vehicle is impounded, the impounding tow truck operator is required to notify the legal and registered owners of the vehicle. This notice must be in writing within 24 hours of impoundment and must inform the owner of the identity of the person or agency authorizing the impound. The notification must also include the name of the impounding tow firm, its address, and telephone number.

An impounded vehicle may only be redeemed by:

the legal owner;
the registered owner;
a person authorized in writing by the registered owner or the vehicle's insurer;
a person who is determined and verified by the operator to have the permission of the registered owner of the vehicle; or
a person who has purchased a vehicle from the registered owner who produces proof of ownership or written authorization and signs a receipt.

Summary of Substitute Bill:

An impounded vehicle may also be redeemed by:

a vendor working on behalf of the vehicle's insurer;
a third-party insurer that has a duty to repair or replace the vehicle; or
a vendor working on behalf of a third-party insurer that has a duty to repair or replace the vehicle.

In order to redeem a vehicle, a third-party insurer or a vendor working on behalf of a third-party insurer must obtain consent from the registered owner or the owner's agent to move the vehicle. The third-party insurer must document the consent in the insurer's claim file.

If a third-party insurer or a vendor working for a third-party insurer redeems a vehicle, the registered owner of that vehicle must be:

granted access to the vehicle; and
allowed to reclaim possession of the vehicle.

An "owner's agent" is:

the legal owner of the vehicle,
a driver in possession of the vehicle with the registered owner's permission; or
an adult member of the registered owner's family.

Staff Summary of Public Testimony:

(In support) The bill tries to clarify when an insurer can gain control of an impounded vehicle. If an insurer cannot redeem a vehicle, the storage fees for the impoundment will mount. There are times when an insurer is aware of a claim related to an impounded vehicle but cannot contact the policyholder. An example is if the policyholder is hospitalized. If the insurer can retrieve the vehicle, it keeps down the storage fees and helps the insurer close the claim more quickly. One insurer could save up to $63,000 a year. An insurer would not have the ability to start repairs but it can begin the process of estimating the claim.

(With concerns) Generally, insurers are allowed to retrieve the vehicles of their policyholders. This bill allows an insurer to retrieve any vehicle connected to a claim and that can be a problem. Perhaps the WSP or the DOL should adopt a form to provide some safe harbors for the tow truck operators. The tow truck operators have a number of other issues with insurers. Those may not be addressed in this bill, but they are serious. Sixty-three thousand dollars a year does not seem important in the context of the many issues between insurers and tow truck operators. At times, the insurer may not redeem an impounded vehicle. The insurer may tell the tow yard to turn it into scrap. Insurers may refuse to pay for tow-related services. Insurers usually pick up their policyholders' cars within 24 hours. This bill seems to allow insurers to pick up the car of a third-party. The owner of the vehicle may have possessions in the vehicle that have real or sentimental value and they will go with the possession of the car.

(Opposed) None.