Getting Dumped
No cash but stuck with the trash from the crash
By Lynn Ford
On January 22, Transport Towing in Joliet, Illinois, got an urgent phone call from the state police. Two semis carrying mobile homes had collided and flipped, blocking all westbound traffic on Interstate 80.
That was right after lunch. About seven hours later, Transport owner Bill Parks finally sent home his chilled and tired-to-the-bone crew. He wearily surveyed two dumpsters full of debris what sat on is lot, potential salvage the insurers had asked him to collect, transport, and store.
Parks was proud of his crew. The seven men had used heavy equipment to right and move the mobile homes. And they'd gotten traffic moving within 45 minutes. They had even suffered the indignity of chasing the pink insulation that had blown across the roadway like snow before the winter winds.
Parks sent out a detailed invoice for $7850. Now all he had to do was wait to get paid. Anyone want to place a wager on whether Bill Parks ever got paid?
No takers? Then I guess you towers out there know where this story is headed. Yes, Bill Parks is still waiting for his money. And he's still angry. Just ask him, he'll tell you.
"Three insurance adjusters show up at the gate. They looked at the salvage. They promised to pay. Then it started getting dirty," Parks said. "Then they conspired to dump it right on my lot. Why pay that kind of money for a total loss? Meanwhile, I've got seven people with evening overtime, with a million dollars of equipment on the road, 33 police to reroute traffic and I wind up picking up the garbage… Do you work for nothing? Does your husband? That's what they asked us to do" Parks calls it a classic case of "insurance dumping."
INSURANCE DUMPING
Insurance dumping is when nothing of value can be salvaged from the wreck and the insurance companies run away and leave you with the garbage that you've dragged back to your lot.
Fortunately, in heavy recovery, Parks case is unusual. Most of the time, there's at least some salvageable material either in the cargo or the
tractor-trailer itself. That gives the tower leverage in collecting fees.
Usually, disputes in heavy recovery stem from the amount of the charges and whether they are reasonable. That can result in some pretty heavy-handed negotiations. The deep pockets of the insurance companies can give them the option of stalling payment. Smaller towers have to cave in just to keep the cash flowing to make payroll.
But the fault is not always with the insurers. Unclear billing is the biggest reason insurers give for not paying in a timely fashion. And insurance companies don't have a corner on dishonest business practices.
Bottom line? The towers don't want to eat the bill. The insurers don't want to be overcharged. Historically, those opposing goals have created a relationship undermined by deep distrust where every transaction is colored by suspicion.
"There's an adversarial relationship, there's no doubt about that," said Doug Shulman of UIS Brokers East, one of the largest insurers of towers in the country. "The insurers are claiming the towers are raping them when there's a truck turnover or major incident. What's really going on is the average tower doesn't know how to put a bill together. So the towers give the bill to the truckers. The trucking company gives it to the insurance company. The insurer freaks out. The truckers freak out. The tower freaks out."
Education is Key
The sour relationship between towers, truckers and insurance company is significant and was a major topic at the Legislative Conference in March for members of TRAA, the Towing and Recovery Association of America. There, truckers, insurers, and towers good-naturedly duked it out on discussion panels designed to improve the working relationship between the inter-dependent businesses.
"Insurers were quite informative," said Harriet Cooley, executive director of TRAA. "I think they learned a lot too. Insurance companies and truckers often don't understand what goes into recoveries."
Cooley said insurance companies need to understand that every recovery is different and requires different techniques, equipment, and expertise. "There is no standard bill," Cooley said. "A standard jackknife may be about the same, but leaking fuel or a HazMat situation can be really different. Some are extraordinarily expensive - $ 25,000 is not unheard of if you have to call in EPA or make a recovery from an embankment or bridge."
Key to improving the relationship is education, communication, and legislation, Cooley said. She is researching state law on insurance dumping and abandoned vehicles for next year's conference in March. She is also encouraging towers to work though their associations to enact new state laws. "Every state does it differently," Cooley said. "We can learn from each other."
Many states offer a variety of arbitration or mediation, which is working extremely well, expert's say. Ironically, they are dealing mainly with complaints from insurance companies, not the other way around.
During arbitration or mediation, bonds usually have to be posted by the insurance companies, guaranteeing towers will be paid a reasonable recovery fee. "Especially on franchised highways, where only one tower is permitted, he's usually paying someone dearly for that monopoly. So a truck turns over, the tower rights it, brings everything back, and sends a bill for $30,000" Shulman said. "The truckers refuse to pay it. Their insurers provide a bond. They get there stuff back and settle the dispute later. If he deserves the $30,000, he'll get it. If he's trying to rip the trucker off, then he won't."
Shulman says the work of associations like Cooley's is paying off. "There's never been adequate communication between the towing industry and trucking or insurance," Shulman said. "Now I believe it's making things better. If it weren't, or tensions weren't being eased, trucking companies would be putting together their own network of towers."
Education is also working, Shulman said. "We're seeing a new breed of tower coming in now," he said. "They're fully automated. They an figure out their expenses and what they need to do to make money. But unfortunately, a lot of them still don't. National and state associations are trying to bring them into the 21st century."
Expertise at a Price
But towers aren't the only ones in need of education.
There's an old joke about the factory what shut down when a machine broke. They call in an expert repairman. He takes a screwdriver, turns one screw, and the machine fires up. Then he sends the company a bill for $5000.
The owner gets the bill, jumps up and down and demands an itemization. The repairman sends another bill. For labor: one hour at $75. For knowing where to put the screwdriver: $4925.
"Hey, if I know how to hook up your Ferrari and get it out of the ditch without harming it, should I charge the same for a beat-up VW that can't get hurt anymore?" asks Mike Seamon, executive director of the Professional Wrecker Operators of Florida. "We have to educate people about what's involved in a recovery and what the rates should be."
"Our biggest problem is convincing everyone that we need to be paid a decent rate for recoveries," he said. "Equipment has improved but so has the cost and liability. When you're working with large loads and you're capable of recovering them without further damage, that expertise has a price"
Getting paid fairly and quickly is not easy. It requires lots of communication, paperwork, a detailed invoice, and perseverance. The process of getting paid well and quickly starts when the phone rings.
"I don't pay any bill that I don't know what I'm paying for," said Jeanette Rash of the Texas Towing and Storage Association and a legislative expert. "I agree with the problems that insurance companies face on billing. I know that we can do better as an industry in explaining what we are charging for."
Rash said towers also need to help other players in the industry understand their worth. We need to "get the message about our important role in incident management and congestion management and the costs associated with being an equal partner in that arena. We have a long way to go to get to the point where recovery work is appreciated for what it is and what it costs."
The Value of Photos
Simple things like a camera, tape recorder, and cell phone at the scene go a long way, said Tammy Warn, director of claims management for Transport Corporation of America in Eagan, Minnesota, a full-load carrier in 49 states.
"Everybody should be clean about what they're going to do," Warn said. "We want to start talking right away. Sometimes towers are reluctant to give us that kind of access. But we know our equipment and load better than anyone else. They could use a procedure that could cause a lot of damage. We can see if there's a better way to go. A one minute phone conversation can save tens of thousands of dollars."
Pictures are the best documentation for a detailed invoice. "I've already talked to police. I know what pressure the towers were under. I can see in a couple of pictures what happened," Warn said. "When the amount is reasonable, understandable, and documented, we can pay the same day. That's why communication is so important."
When the amount is not reasonable, or worse, inaccurate, then "we've got a big problem" Warn said. Once she ran a bill past a competitor in the same area. "They said, 'Hey, they don't even own this many trucks.' They all pretty much know each others business."
Wayne Martineau, president of Statewide Towing of Massachusetts, said justifying the charges is the key. His state is one of the leaders in establishing a fair arbitration and mediation process for towers, truckers and insurance companies. "Ninety percent of the time, that's all it is," Martineau said. "Justifying the charges if a bill is written property, it's usually not a problem." Martineau suggests writing a bill "like you're painting a picture."
An arbitration board can save thousands of dollars in litigation. Most companies accept the findings of the board and don't have to go to court, Martineau said. That's especially important for small towing companies. In some cases, he added, the board finds the tower was probably entitled to more money than he charged.
The Little Guys
Ironically, the towers who suffer the most from insurance dumping, or nonpayment, are the light-duty towers. And that's not a light-duty problem. Light-duty towing makes up as much as 85 to 90 percent of all towing. By some estimates, as much as 30 to 40 percent of light-duty towing results in some form of abandonment or insurance dumping.
In most states, dumping is illegal, Martineau said. "But if insurance companies don't deem enough salvage, it promotes dumping. But the time they bail it our and pay the towing and storage, it isn't worth their money or time to pick it up, so they leave it, which is dumping.
State and national associations are working on legislation to require owners and insurance companies to pay for towing, storage and disposal. In the meantime, towers have to be fastidious in their recovery keeping and follow-up including:
· Always collect as much information at the scene as possible.
· Take names, addresses, and phone numbers.
· If police are involved, get copies of accident reports.
· If there are charges, keep track of the court case and send copies of the invoice to the court clerk.
"It impacts the industry" Bill Parks said. "Every time a vehicle eight years or older is in a wreck, you gotta wonder if you're going to get paid. It's a 1972 Ford, but police say it's your rotation, come out and get it, and pick up the debris. You're the garbage man in a throw-away country." Parks favors legislation that treats towing charges like property damage, covered by insurance, and includes towing charges in court fines. He also favors stronger laws against abandonment.
"Be cautious," Parks warns. "Get information, get case numbers, get the proper paperwork signed, and make a paper trail"
Sometimes You Lose
But, as Parks found out, the most meticulous record keeping won't help with an unscrupulous insurer, or a irresponsible trucker. "A lot of people misunderstand and think just because an adjuster looks at a vehicle they're automatically bound to cover the vehicle," said Seamon. "Sometimes that's not the case. You can't do much about the trucker who lets his insurance lapse and then rolls over. You've got to move it."
"You may not make a profit on every job you do. There will be times when things don't go quite right. Sometimes people steal. Sometimes you make a lower profit," he added. Just like in the medical industry, Seamon said, the people who can afford to pay end up paying the share of those who can't or won't. As a result, he said, "the costs of towing have to be higher because we're not getting paid for every job."
(Article retyped and posted with permission of Towing and Recovery Footnotes, originally published January 2003 edition)
