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An auto insurer that is new to Michigan is suing numerous towing and collision repair shops in metro Detroit, claiming the businesses are charging extortionate prices such as more than $2,000 for a tow and $150 or more per day for vehicle storage.
The insurance company, known as CURE or Citizens United Reciprocal Exchange, says it has sued about a dozen area towing and collision shops since this spring and filed its latest lawsuit this week.
Most of its lawsuits in Wayne County Circuit Court are against private businesses whose towing and storage rates aren’t regulated by the City of Detroit or other municipalities — or at least not regulated during the sort of alleged circumstances in which they took in a CURE customer’s vehicle after a crash.
CURE says the businesses refused to release the vehicles until CURE paid extravagant amounts for their towing and storage, in some instances more than $5,000 for a single vehicle.
CURE — and not the vehicles’ owners — ultimately paid the businesses to get the vehicles released.
In most of the circumstances in CURE’s lawsuits, the vehicles were declared total losses while at the collision shops because the cost to repair would have rivaled the vehicle’s value.
Even so, CURE still paid the collision shops to get possession of the totaled vehicles because such vehicles can fetch thousands of dollars through salvage auctioneers like Insurance Auto Auctions or IAA.
CURE started in New Jersey and entered Michigan last year in the wake of the no-fault insurance overhaul. It markets itself as a lower cost auto insurer, especially for traditionally high-cost areas such as Detroit.
It is one of the few auto insurers in Michigan — possibly the only one — to not use a credit score-like metric known as an “insurance score” when pricing rates for customers.
In a phone interview, CURE CEO Eric Poe said that forcing insurance companies to pay outrageous claims like $5,000 for a single vehicle’s towing and storage ultimately leads to higher auto insurance premiums for everyone.
“I do believe that a lot of other carriers, instead of fighting, they have agreed to inflated (towing and collision shop) rates because it’s easier, and then say, ‘Well, I just won’t write business in Detroit,’ ” Poe said.
“So we would rather fight and make sure things are done correctly and fairly than deal with a situation where we have to increase costs for all of those people who live in Detroit.”
$150 per day
CURE says the businesses it is suing either towed or arranged to be towed CURE customers’ vehicles from accident scenes.
Once the vehicles arrived at collision shops, the businesses began to charge a growing list of fees. The fees sometimes included as much as $150 to $175 per day for vehicle storage, plus a variety of other charges, on top of the price for the tow.
CURE says the businesses wouldn’t release the vehicles until the bills were paid. A few of the per-vehicle bills that are cited in the lawsuits include:
- $6,050 to The Collision Repair Shop in Ferndale for release of a 2016 Volvo S60.
- $5,720 to Drake’s Collision in Southfield for release of a 2017 Chevy Impala.
- $4,200 to American Collision and Automotive in Detroit for release of a 2018 Chevy Silverado.
- $3,291 to The Collision Shop of Warren for release of a 2009 Ford Fusion.
Attorneys for The Collision Repair Shop and Drake’s Collision called CURE’s lawsuits frivolous and denied any wrongdoing.
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Staff at American Collision and The Collision Shop of Warren told the Free Press they would forward messages seeking comment to the firms’ owners or managers, who did not respond.
Another insurer, the AAA Auto Club Group, last month sued Total Package Towing in Detroit and a separate allegedly affiliated business, Detroit Quality Collision, accusing them of charging “outrageous” towing, storage and administrative fees totaling $5,955 to release a vehicle.
The suit claims that Total Package was never authorized to deliver the vehicle to the collision shop.
An attorney for Total Package Towing, Gregory Rohl, said the firm’s fees are standard in the industry and that either the vehicle’s owner or insurance company needs to pick up the vehicle in a timely manner.
“It appears that the new wave of litigation against towing companies is simply designed to offset their costs, which in large part are a direct product of their delay in responding to their insured’s liability exposure to tow and attendant storage fees,” Rohl said in a text message.
AAA’s attorney in the case did not respond to a request Friday for comment.
$15 per day
The fees charged by businesses in the CURE lawsuits were higher than what is allowed by towing companies and storage lots participating in the Detroit Police Department’s program for “authorized” towing and impounds.
For authorized tows, firms are generally prohibited from charging more than $125 per tow and $15 per day for storage.
In exchange for accepting those set prices, last updated nine years ago, the firms are put in rotation for a steady stream of towing business from accidents and crime scenes in Detroit. There are currently 14 authorized tow companies in the rotation.
The towing industry in Detroit has been the subject of corruption scandals in recent years involving police officers, elected officials and towing company owners.
Several current or former officers have faced criminal charges for accepting bribes to steer work to towing companies, including a recently retired officer who was sentenced last month to 15 months in prison.
Former Detroit City Councilman Andre Spivey was sentenced in January to two years in prison for accepting nearly $40,000 in exchange for his political influence on a vehicle towing ordinance before the council. He took the money from an individual in the local towing industry who also is a confidential FBI source.
Some auto accidents in CURE’s lawsuits occurred in Detroit and were responded to by Detroit police, according to police reports.
Yet those vehicles did not go into the city’s authorized towing system with its capped fees.
An attorney for CURE, Timothy Mizerowski of Mizerowski Thon Parker & Lefere in Novi, said they hope to uncover more about the circumstances of each tow and how the vehicles got to the collision shops as the cases develop.
Drivers in accidents in Detroit are not necessarily required to accept an authorized towing company from the rotation that police dispatch to the scene.
So long as no criminal activity is suspected, they aren’t blocking traffic and the alternative tow truck arrives promptly, drivers can go with a private towing company of their choice.
Under those scenarios, the price for the tow — plus subsequent storage — isn’t subject to the regulated rates.
Julie Semma, vice president of the Detroit Towing Association, which isn’t involved in CURE’s lawsuits, said in an interview that she considers a vehicle storage rate of $150 or more to be “exorbitant.”
Semma also is the owner of 7-D’s Towing in Detroit, one of the authorized towing firms.
“A $150 per day is definitely outrageous,” she said. “But I can tell you this, Detroit authorized towers do not charge exorbitant amounts.”
Vehicles sat for weeks
Several collision shop workers associated with shops being sued, who declined to speak for attribution because of the pending litigation, say that CURE takes an unusually long time to retrieve its totaled vehicles from shops.
They noted how weeks often passed between the time that the vehicles cited in CURE’s lawsuits arrived at collision shops and when the totaled vehicles left — all while the storage fee clock was running.
Collision shops often have limited space and charge higher storage fees as an incentive for non-customers to get their vehicles out, the insiders said.
Many shops have a grace period before the storage fees start, such as 48 hours. If the vehicle’s owner gets repair work done at the shop, any accrued storage fees are typically waived.
“We are not a storage facility,” one industry insider said. “Imagine 50 insurance companies leaving their cars here for a month at a time.”
Poe, CURE’s CEO, declined to comment about why the insurance company has taken weeks in some instances to remove vehicles from collision shops.
Lots of fees
The CURE lawsuits accuse businesses of civil extortion, unjust enrichment, violating the Michigan Consumer Protection Act and statutory conversion, or wrongly taking control over vehicles, among other claims.
CURE’s largest monetary claim is against Drake’s Collision in Southfield, citing it for “unfair, unconscionable and deceptive trade practices.”
The insurer says it ultimately paid $48,245 for Drake’s to release nine vehicles. All of them had been totaled.
One $5,520 bill was for a 2013 Lincoln MKZ. The listed charges on the bill were $2,075 for towing from an outside firm, $1,050 for storage, $705 for “cleanup,” $990 for “miscellaneous,” $350 for administration, $195 for “yard” and $155 for “preservation.”
Drake’s attorney, Steven Haney of the Haney Law Group, called it a frivolous lawsuit and said Drake’s fees are permissible by law and that its $150-per-day storage rate is reasonable.
The underlying issue, he said, is that it takes CURE an average of 21 days to retrieve vehicles from Drake’s.
“If they know it is a total loss, there is no excuse for them to simply not get a tow truck and take it off my client’s lot,” Haney said. “What possible explanation do they have for leaving cars lying around all over Detroit?”
ContactJC Reindl at313-378-5460 or [email protected]. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
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