Automotive Repair Dealers and Storage Fees
(Released January 5, 2024. Updated January 20, 2024.)
Effective January 1, 2024, Assembly Bill 1263 (Berman, Chapter 681, Statutes of 2023) authorizes the Bureau of Automotive Repair (Bureau or BAR) to adopt regulations to clarify the authority to regulate storage fees charged by automotive repair dealers consistent with provisions of the Vehicle Code (VC), Civil Code (CC), and any related regulations of the California Department of Insurance (CDI). Bureau regulations on storage fees will be developed with input from all stakeholders to enhance consumer protections and improve industry education and compliance. To help support consumers and both the automotive repair and insurance industries while the regulation process is ongoing, BAR offers the following guidance on common storage fee issues frequently included in consumer complaints filed with BAR.
Charging storage fees
Can an automotive repair dealer charge storage fees?
Yes. An automotive repair dealer can charge reasonable storage fees after a lien has arisen in the following circumstances:
The vehicle is towed and/or stored at the business because of an accident or recovery of a stolen vehicle. (VC § 22524.5)
The contracted repairs (i.e., the repairs listed on the estimate and authorized by the customer) are complete and the invoice is provided to the customer, or 15 days after the authorized repairs are complete, whichever occurs first. (CC § 3068)
Additionally, an automotive repair dealer can charge storage fees following completion of a visual inspection or tear down if, after providing the required repair estimate, the customer does not authorize the repairs or retrieve the vehicle within a specified timeframe. (CC § 3068, California Code of Regulations (CCR) § 3353(c)) Although not required, it is a best practice that the inspection or tear down estimate include the specified timeframe and notify the customer of potential storage fee charges.
An automotive repair business must hold a valid automotive repair dealer registration to benefit from any lien for labor or materials, including the ability to charge reasonable storage fees, or sue on a contract for automotive repairs performed. (Business and Professions Code (BPC) § 9884.16)
Pursuant to the California Fair Claims Settlement Practices Regulations, as adopted by CDI, insurers who exercise their right to inspect a vehicle must perform the inspection within six business days after receiving a claim notice and/or a request by or on behalf of the insured for a supplemental estimate. (CCR, title 10, § 2695.8(e)(4))
See Working with insurers to learn more.
When is an automotive repair dealer not allowed to charge storage fees?
An automotive repair dealer cannot charge for storage fees in the following circumstances:
The vehicle is undergoing repairs. Storage fees cannot begin to accrue until all repairs estimated and approved by the customer have been completed and the customer has been notified that the vehicle is ready to be picked up. (Owens v. Pyeatt, 248 Cal. App. 2d 840 (1967))
The vehicle is undergoing a tear down. Because a tear down (i.e., disassembling a portion(s) or area(s) of the vehicle or vehicle component(s) to evaluate their condition) is a repair transaction, storage fees cannot accrue until the tear down is completed and an itemized repair estimate after tear down is provided to the customer. Storage fees may begin to accrue if the customer does not authorize repairs, or the vehicle is not retrieved within a specified timeframe after an itemized repair estimate after tear down is provided to the customer. Although not required, it is a best practice that the automotive repair dealer include the specified timeframe on the tear down estimate. (CCR § 3353(c))
What are reasonable storage rates and fees?
A storage rate and fee is considered reasonable if it is comparable to storage-related rates and fees charged by other automotive repair businesses in the same geographic/demographic area. (VC § 22524.5(c)(2)(B))
What are unreasonable storage rates and fees?
The following rates and fees are presumptively unreasonable:
Administrative or filing fees, except those incurred related to documentation from the Department of Motor Vehicles (DMV) and those related to the lien sale of a vehicle
Load and unload fees
Gate fees (except when the owner or insurer of the vehicle requests that the vehicle be released outside of regular business hours) (VC § 22524.5(c)(3))
When does a lien occur?
A lien occurs in the following circumstances:
The automotive repair dealer completes the contracted repairs and provides the invoice to the customer, or 15 days after the completion of repairs (e.g., the automotive repair dealer loses contact with their customer), whichever occurs first. An automotive repair dealer has 30 days after the lien has arisen to apply with DMV for authorization to conduct a lien sale. (CC §§ 3068(a) and (b), 3071)
The automotive repair dealer takes possession of a vehicle for towing and/or storage purposes prior to any contracted repairs. In this situation, applying with DMV for authorization to conduct a lien sale is dependent on the value of the vehicle. (CC §§ 3068.1, 3071, 3072) For information on lien sales, visit www.dmv.ca.gov.
NOTE: An automotive repair business must hold a valid automotive repair dealer registration to benefit from any lien for labor or materials, including the ability to charge reasonable storage fees, or sue on a contract for automotive repairs performed. (BPC § 9884.16)
Towing and storage services
What are reasonable towing and storage rates and fees?
If an automotive repair dealer tows and stores a vehicle, the towing and storage charges are considered reasonable if they do not exceed the rates and fees charged for similar services provided in response to requests from a public agency such as the California Highway Patrol or local police department. (VC § 22524.5(c)(2)(A))
If an automotive repair dealer tows and repairs a vehicle, can the towing services be authorized on the repair estimate?
No. If the customer provides written authorization for towing services, the authorization must be provided on a form separate from the repair estimate. (VC § 22651.07(e))
Is an automotive repair dealer required to provide an invoice when charging for towing and/or storage services?
Yes. An itemized invoice for towing and/or storage services must be provided to the customer. (VC §§ 22651.07(b) and (e))
Is an automotive repair dealer that provides towing services required to display the Towing and Storage Fees and Access Notice?
Yes. If an automotive repair dealer provides towing services, they are required to post in an area of the business facility, in plain view of the public, the Towing and Storage Fees and Access Notice (VC § 22651.07(a)(1)(A)) and have copies available to the public. In addition, the invoice must include a notice stating copies of the Towing and Storage Fees and Access Notice are available upon request. (VC § 22651.07(a)(3))
Working with insurers
What happens if the automotive repair dealer declines to perform repairs?
When an automotive repair dealer perceives a vehicle to be a total loss and declines to perform any repairs, including a tear down, but accepts the vehicle for storage, this transaction is subject to the provisions of the Vehicle Code and Civil Code governing storage and lien sales, respectively. (VC § 22524.5 and CC §§ 3068.1, 3071)
What happens if the insurer delays inspection of a vehicle?
Pursuant to the California Fair Claims Settlement Practices Regulations, as adopted by CDI, insurers who exercise their right to inspect a vehicle must perform the inspection within six business days after receiving a claim notice and/or a request by or on behalf of the insured for a supplemental estimate. If an insurer elects to inspect a vehicle but fails to do so within six business days, the consumer or the automotive repair dealer may file a fair claims practices complaint with CDI. (CCR, title 10, § 2695.8(e)(4)(B))
For more information, visit www.insurance.ca.gov.
What happens if there are delays in the retrieval of a total loss vehicle?
If an automotive repair dealer begins a repair transaction, including a tear down, and the vehicle is subsequently determined to be a total loss, storage fees may begin to accrue only after notifying the customer the authorized repairs are complete and the total loss vehicle is ready for retrieval. (Owens v. Pyeatt, 248 Cal. App. 2d 840 (1967))
Who is responsible for paying storage fees involved in an insurance claim?
If a claimant’s automobile insurance policy includes coverage for storage charges, then the insurer is responsible for paying the reasonable storage fees resulting from an accident or recovery of a stolen vehicle. The insurer may pay the automotive repair dealer, the insured, or the claimant on behalf of the insured (if the claimant was not the at-fault party). (VC § 22524.5(a))
Resolving complaints and disputes
How does BAR respond to storage fee complaints?
BAR investigates and mediates consumer complaints involving storage charges by automotive repair dealers. Consumers who have concerns that cannot be resolved with the business’s management are encouraged to file a complaint with BAR.
BAR also currently accepts referrals from insurers regarding storage-related issues. The referrals are managed through a dedicated email account at ARDStorageReferrals@dca.ca.gov. When reviewing these matters, BAR will attempt to mediate an equitable and timely resolution between the parties. If BAR determines the storage rates and fees charged by an automotive repair dealer are reasonable, the insurer is notified and BAR takes no further action.
How can an automotive repair dealer avoid storage disputes with customers?
As with most disputes between customers and automotive repair dealers, issues involving storage fees can often be avoided if there is frequent communication with the customer and a record of the communication is documented on the work order and final invoice.