Canadian Underwriter

How Intact lost this battle over vehicle storage fees

May 16, 2019   by Greg Meckbach

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Canada’s largest P&C insurer has suffered a setback in its quest to minimize vehicle storage fees.

A recent Ontario court ruling means that, for the time being, Intact Insurance has to pay J.P. Towing Service & Storage Limited storage fees of $70 a day after Intact-insured vehicles are recovered after accidents.

In 2012, Intact “took exception” to J.P. Towing’s $70 daily storage fee, Justice Laurence Pattillo of the Ontario Superior Court of Justice wrote in J.P. Towing v. Intact, released May 1.

J.P. Towing is contracted by the Toronto Police Service to tow vehicles which are abandoned or involved in a collision. The company charges $180 for towing and $70 a day for storage, Justice Pattillo wrote.

From 2012 through 2018, Intact made 108 applications, on behalf of auto insurance clients, to court under Section 24 of Ontario’s Repair and Storage Liens Act. In each case, Intact was asking the court for a certificate giving Intact possession of a vehicle stored by J.P. Towing, while the dispute over storage fees was being resolved.

Other insurers have also made similar applications against J.P. Towing.

In 2016, a Small Claims Court judge ruled in favour of J.P. Towing over the $70 daily storage rate that the towing company charged for a vehicle owned by one particular Intact client – Christopher Sherwood.

The more recent separate Ontario Superior Court of Justice ruling released May 1 means that the 2016 small claims court ruling — J.P. Towing Service & Storage Ltd. v. Christopher Sherwood — effectively applies to other disputed storage fees involving Intact.

This is because in J.P. Towing, Justice Pattillo ruled that the legal concept of issue estoppel applies to the Sherwood ruling.

Issue estoppel essentially means that a decision has already been made on the same question involving the same parties and that previous decision is final.

Justice Patillo’s May 1 ruling was on a series of motions brought by J.P. Towing.

As a result of his finding (on issue estoppel) in favour of J.P. Towing, Intact has to pay J.P. Towing nearly $37,000 in legal costs.

The May 1 decision, however, was not entirely against Intact. Justice Pattillo declined to award J.P. Towing $1 million in punitive damages, finding that Intact’s conduct was neither high-handed nor malicious. He also found that Intact was not being vexatious in continuing to dispute the $70-a-day storage fees.

Intact had argued the 2016 Sherwood case was about the fair value to store Sherwood’s vehicle only. But Justice Pattillo found that Intact had understood that it would be bound by the 2016 Sherwood decision on the daily storage rate with respect to Intact’s auto clients.

In 2013, lawyers for Intact and J.P. Towing agreed that they would select a test case and the result would be “persuasive” on remaining cases. Sherwood was selected as that test case.

“The agreement between the parties preserved each party’s right to appeal any decision (which was not exercised in Sherwood) and following the decision, the parties could settle the remaining cases or determine the appropriate course of action,” Justice Pattillo wrote. “To the extent that the remaining cases concerned issues regarding the towing fee or the number of days of storage, those issues remained alive and were not resolved by Sherwood. They would have to be resolved or litigated. However, as between J.P. Towing and Intact, Sherwood settled the issue of the daily storage rate at $70 a day.”

Minimizing towing and storage costs is one way auto insurers have addressed claims costs.

In 2015, the Ontario government passed Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, which changed several laws. One result of that omnibus bill was that under the Repair and Storage Liens Act, vendors can only store vehicles for 15 days (down from 60) after an accident without giving notice to the owner.

Bill 15 made numerous other changes affecting auto insurance. One result is that disputed accident benefits claims now go to the Licence Appeal Tribunal instead of the Financial Services Commission of Ontario.

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9 Comments » for How Intact lost this battle over vehicle storage fees
  1. william hazelton says:

    Really, $70.00 a day to store. (park) a car? There is nowhere in Canada that you would be required to pay that kind of money to park a car. Maybe it is time to sue the city of Toronto for agreeing to such rates.

  2. Jim Kozak says:

    I believe that if the police call the towing company, they charge more than double their rate as an emergency and storage rates are affected accordingly, however if the consumer calls a tow truck which comes out equally as fast, the customer can then have it taken to a body shop and left there likely at no cost as the shop has a potential customer. The police should advise the driver to make arrangements to have their vehicle towed as new cars have road side assistance built in & a lot of people subscribe to CAA which has free towing.

    • Ken Walker says:

      I had an insured accident with my car a year ago during a microburst rain event. I called CAA for a tow to a car dealer repair shop 40 km away. The dispatched company arrived and “suggested” I have him tow the car to his local lot and then he would drive me home to get dried off faster instead. He then had the adjuster come to his location in rural NS instead of Halifax and charge $90 per day storage for 6 days greatly inflating the cost of the claim.

      I will continue to call CAA as a consumer but will not use that tow company again who’s practices drive up the cost of everyone’s insurance.

  3. K says:

    You have to blame the lawyers for the insurance company to a large degree. How can you not talk some sense into the judge that $70/day or $2100/month or $25200/year to store a car is a little much? You can store a car inside for an entire winter for a few hundred. Maybe the insurance companies don’t want to win?

  4. Andy says:

    Everyone needs to understand that this 70/day is not JUST storage. There is cleanup and maintenance of the lot. Often damages to the lot due to broken vehicles. Oil spillage from vehicles that requires cleaning of the lot. The insurance company spent 121k on the court file so they tried their hardest to prove otherwise. Judge ruled based on facts. With minimum wage gone up to 14/hour i think the storage rate should be at 80/day.

  5. S says:

    Hi Andy, how is that any different than any other parking situation? A downtown heated parking garage would deal with every one of these problems, and they charge $20 a day, while offering heat and power on top of it.

    It’s got nothing to do with the insurance companies – they hate it, but they have no choice because they are required to deal with the insured’s vehicle by law. These storage companies are taking advantage of people at the worst time. Even at 15 days before they even have to give notice, at $70 a day that’s still $1050. You wonder why insurance premiums are high? Here’s one factor that’s spiking them up that can be addressed.

    Think of it like this… if you pay $1000 in towing and storage fees on every claim, and 1 in 10 vehicles have a claim every year, that means $100 of your insurance premiums are going straight to paying for this – and that’s not counting the cost of having someone at the insurance company dealing with these tow and storage companies to get the vehicles out and off these overpriced lots.

  6. Rich says:

    Average storage lots do not have to carry the same insurance coverage that a tow company does witch on average is $600 per month per truck plus all other coverages and if your car is smashed and leaking all kinds of fluid good luck with parking it at green P

  7. leo says:

    after reading this im afraid im in that situation… my car was been tow by random tow truck because police told me to go with them. I was trying to get my car back 1 week ago for repair but they keep on delaying for over 1 month… last week i went to the shop everyday they keep on giving same excuses and dont want to repair my car….im screwed…I hate those repair shop and tow truck companies. Even the police are working with them. I saw the OPP car park inside their garage. OMG… corrupted and wicked system..

  8. Kevin says:

    Wow it’s a business not some Peter pan charity. If you drive drunk and get your car impounded for 7 days you should pay $1000 plus because your an idiot. If you are in an accident you have insurance for a reason. If you are at fault and don’t have collision coverage you probably suffer from “it’ll never happen to me” syndrome, or drive a cheap disposable car. Clean your stuff out (They cannot hold the contents of the car hostage legally), sign it over to them so they can scrap it, and go buy a different car.

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