Canadian Underwriter

Tow referral fee rules ‘hard to monitor and enforce,’ insurer warns

August 23, 2018   by Greg Meckbach

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Auto insurance providers should remind motorists that in the event of an accident, it is usually the driver – not the tow truck operator – who decides where the car gets towed.

Motorists often don’t know what rights they have if they are involved in a collision, Teresa Di Felice, assistant vice president of government and community relations for auto insurer CAA South Central Ontario, said in an interview Wednesday.

CAA SCO announced Wednesday its Towing Bill of Rights, which contains several bullet points that consumers can store in their glove compartments. One of those reminders is that motorists have the right to decide who can tow their vehicle – and what location to tow it to – unless otherwise directed by police.

Ontario law requires tow truck operators to tell motorists whether or not they are getting a “financial incentive” to tow a vehicle to any particular vehicle storage facility or repair shop. There is no prohibition right now on such a fee.

Aviva Canada said earlier this year it is calling on the Ontario government to ban referral fees – including but not limited to collision repair centres paying tow truck operators.

Di Felice told Canadian Underwriter Wednesday she has heard stories of “four or five tow trucks appearing on the scene vying for the business of taking up a particular vehicle. “It could be that that tow truck driver is associated with a particular body shop,” she said. “We still feel there is probably not a lot of disclosure” on the part of tow truck operators of their referral arrangements.

A ban on such a referral “merits discussion,” Elliott Silverstein, manager of government relations at CAA SCO, told Canadian Underwriter earlier. But CAA SCO does not go so far as to say there should actually be a ban on such referrals.

“It is hard to monitor and enforce the disclosure of tow truck drivers telling the driver [of the vehicle] they are picking up that they have a relationship with a body shop; that they are taking you to a particular repair facility,” Di Felice said Wednesday. In some cases, she added, “your insurance company wants you to go to [a body shop other than the one recommended by the tow truck operator] and that’s because your insurance company has probably vetted out who best to do business with in terms of getting the repairs done.”

CSN, which has more than 335 collision repair centres in Canada, does not give referral fees to tow truck drivers, the firm’s chief operating officer, Flavio Battilana, told Canadian Underwriter earlier. “It’s wrong.”

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5 Comments » for Tow referral fee rules ‘hard to monitor and enforce,’ insurer warns
  1. Geoff Robinson says:

    This is a very interesting topic that definitely has to be addressed which can be done in the old adage “KEEP IT SIMPLE”.
    First pass an Ontario Law that stipulates there are to be NO REFERRAL FEES from Body shops or repair garages PAID TO TOW TRUCKS
    Secondly specify who has control over the vehicle being towed & to were in an order of responsibility. 1/ Police 2/ Owner 3/ Insurance Company insuring the vehicle which most have preferred repair shops that do not charge large storage fees.
    All tow truck operators MUST HAVE A LIST of all Insurance Companies Preferred repair shops, if one is not available the closest pound would be used AND NO STORAGE FEES for 10 days (which allows the Insurance company to move their Client’s auto, after that time period storage fees are applicable at a Government rate again applied in LAW.
    Tow Truck rates would be SET in LAW a base rate for the service with a hourly rate for extraction & applicable kilometer rate for delivery.
    Also patrol areas would be assigned to tow truck operators so 5 trucks would not arrive to claim 1 vehicle, in the event of a second accident in the same patrol area or multiple vehicles involved a 2nd alarm would be sent out to the backup unit or closest unit to that area.
    These areas would rotate so as all to truck operators share in areas that are more accident prone.


  2. I totally agree with the keep it simple part. Find a reputable company before you need the service so you are not scrambling when you really need one.

  3. ken says:

    Great article, there should be more education for motorists to choose a garage or mechanic that they are comfortable with. Don’t be coerced into bringing your car to a shop you don;t have a good feeling about.

  4. Sam Hook says:

    Very glad I took the time to read and understand this. Thank you.


  5. There are new systems they might want to look into for this. We pay many referral fees in our industry and can’t imagine why it’d be different in others.

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