BUY A TOW TRUCK OR SUBLET TOWING?

[Shopcat]

I would like to hear from shop owners that have decided to buy a tow truck.  Did that became a healthy additional source of income? Was it worth the investment? What advice could you offer a shop owner considering buying a tow truck?

[sjdieselrepair]

We are a diesel repair and fleet service shop, that is my main concentration. I recently bought out a garage with 2 gas techs and all there customers and started doing light duty gas cars and trucks in my shop. With that said, I have 3 tow trucks. 1 rollback, and 2 med duty wreckers ALL PAID FOR (key word). On average I tow 2 trucks in a week for my fleet customers as a added bonus of a one stop shop. Now average I tow 1 of my private customers a week as a added bonus, somtimes its because they need the vehicle delivered or picked up. Its been an added money maker for me definitely since some of my city contracts require it. Definitely for me worth it. 

Some of the cons. First off the insurance for me is just an added average of $3900 a year per truck since the umbrella covers most of it besides the on-hook. Also another con is out of 5 mechanics only 1 tech and me can operate the rollback. Only I can operate both wreckers. If I go on a long tow I'm out of the shop for a wile, my service writer can handle most of the issues but most fleet supervisors want to talk to me and me only. 

If your really thinking of a tow truck you have to think of your customer base and cost effective. If its worth it go for it. Worst thing though is to have to pay for a truck monthly that sits there costing money instead of paying for itself.

[TonyGatto]

I applied to the local AAA affiliate about 6 years ago, forgot about it, and recently received a call asking if I wanted the area. Approximately 2,000 calls a year at an average of $55 per call.

I would need 2 reliable service vehicles and using the 2,000 calls as a baseline, hopefully pickup insurance company calls and private calls from my current customers, it broke even at best. (I do not have a reliable vehicle so I would have to purchase trucks. The hope being I would tow the repairs to my shop.)

Insurance was the killer. I sublet.

JMO Tony

[JimO]

I had my own trucks in the 70's and 80's when vehicles were not as reliable as they are today. It was convenient to have my own truck but I never made towing the main part of my operation. In our area most of the people have newer vehicles that are covered for three years for roadside assistance. Many of our customers also have AAA. Cost of truck, insurance, qualified operator, after hours operator, liability and limited use caused me to sub out all tows. I have a pick-up for road calls which works out well. 

[Custom Coach]

One big drawback to letting someone tow in customers or potential new customers is if they have a friend who runs a shop they might try to steer a customer/ new customer to the friend instead of you.

I had this happen to me and was none the wiser till a customer called to inform me of this we have our own tow truck but its hard to do it all when there are only two of you here.

But to lose a customer to a seedy tower is not acceptable so I take the time and do it myself that way I know I am going the extra mile to keep my customers and hopefully keep them happy.

 

 

[Jmazur]

Most of the time a tow truck becomes an "overpriced toy" unless you dont have much competition in your area. Most of the time it is better, and more cost effective to sublet. If you do decide to do it, run the towing business like a seperate business, go out and get accounts, and expect it to be profitable. 

I prefer to develop relationships with the tow companies, treat their drivers better than any other shop does, and even pay a "spiff" if they refer a customer to me.

[Custom Coach]

15 hours ago, Jmazur said:

 

I prefer to develop relationships with the tow companies, treat their drivers better than any other shop does, and even pay a "spiff" if they refer a customer to me.

I am good with all the drivers from the towing companies here offering cold water when its hot out or coffee when its cold .

But I think its underhanded to pay a driver to steer a customer your way and if you do it once you will have to do it every time they bring you a new customer.

what if word gets out between towers and they all want paid for referrals?

which depending on the size of the town could get to be quite costly over time.

What if most that get steered your way are one time shots? then you are out the extra you paid to get them turned to your shop in the first place.

That's just my opinion but to each his own.

 Not trying to step on any toes here.

 

[Dan Reichow]

We have our own / no reliable companies in the area that can give good service. / Plus we do Free Towing

[HarrytheCarGeek]

You know, I just came to know that my views on towing are obsolete. Talking to another shop owner, he disclose that he owns a part of a very large towing outfit. I didn't press, but he seemed very happy with his investment. Then I found this out.

There is this company that back in 2009 started teaching how to properly bill for towing services, insurance companies aren't too happy with them. Check this out:

 

http://www.claimsjournal.com/news/national/2012/05/14/206743.htm?print

Quote

How to Combat Questionable Towing Bills

By Denise Johnson | May 14, 2012

• Article
• 7 Comments

Approximately 15 years ago, Adam J. Brand’s trucking clients began noticing larger recovery bills from towing companies.

Brand, founder of Brand & Associates, a firm specializing in insurance litigation, said that the practice soon found its way to personal auto.

“[It] migrated to personal auto insurers,” he said, during a session on the subject at the Insurance Fraud Management Conference in Phoenix, Ariz. “The exposure might be smaller, but at a much higher frequency.”

In a three year questionable claim (QC) referral analysis completed by the National Insurance Crime Bureau (NICB), there was a 116 percent increase in inflated billings reported in 2010 as compared to 2009 and a 39 percent decrease in inflated billings reported in 2010 as compared to 2011.

While these are not definitive cases of fraud, the reduction in QC reporting in 2011 may represent the industry’s proactive battle against such fraud.

According to Brand, the main cause for the rise relates to how towing companies get called to a scene. Usually, state and local police investigating a crash will contact a towing company on a rotational list, Brandt said.

The insurance litigator provided an example:

A semi is driven off a rural road and ends up wrapped around trees in a wooded area. A towing company called to the scene billed the semi’s insurer a whopping $21,588 claiming five days of work. The company claimed it used an entire fleet of heavy equipment and wreckers to remove the semi from the heavily wooded area. Day one’s bill included extra charges for a front end loader, chain saws and extra labor – billed at $350 per hour. Day two’s invoice included billing for chipping and hauling away trees and continued extra laborers and day three and four included charges for 24 hours’ worth of environmental cleanup. Day five’s billing had the tractor storage charge, accruing at $50 per day for a total of 45 days before the towing company released the semi after being paid in full.

According to Brand, the “old school” way in which towing companies tried to submit inflated invoices involved questionable invoices submitted by the same individuals. As a result, fraudulent billing practices and rates were easier to spot against standard invoices because the fraudsters had their own signature or thumbprint, he said.

In 2009 a heavy equipment recovery company decided to set the standard for routine recovery practices. The company set reasonable rates for services and sold it to towing companies, Brand said. But, increasingly, the reasonable rates set for services became artificially inflated, like tacking on a four hour minimum or adding on administrative fees.

According to Brand, the company passed on these creative billing ideas to other towers and recovery companies through nationwide training, via websites and even during towing conventions.

Companies became sophisticated, adding experts and full-time attorneys to review coverage issues when insurers denied payment. Brand said that the program was created as an illusion of best practices; companies portrayed themselves as public safety icons.

Brand said the companies built this façade by:

• Exaggerating the danger of the recovery.
• Using carefully selected photos of the scene to support inflated billing.
• Staging or strategically positioning vehicles and equipment to appear as a much more complicated job.
• Loading an accident scene with lights, people and equipment.

Whereas the majority of inflated charges were billed as hazardous materials recovery, they are now being billing as remediation and cleanup, Brand said.

Rob Bodoni, an SIU regional manager for MetLife Auto & Home, shared his company’s success story involving inflated tow bills.

Once the issue was identified by SIU, the company provided training to the auto property field claims unit in order to identify tow bill red flags, Bodoni said. There were subsequent strategy meetings with the auto property field claims management and total loss unit. The issue was added to a watch list and a SIU liaison was designated, he said. There was also coordination with legal counsel and a call out to adjusters to keep an eye out for inflated tow bills.

According to Bodoni, the first invoice appeared a few weeks after the plan was implemented. A field appraiser received a tow bill with a four hour minimum charge that totaled $1,200. The circumstances involved a vehicle slamming into a utility pole, causing an alleged fluid spill that required a disposal drum and charges for cleanup cost and disposal.

“It was very heavily itemized,” Bodoni said of the bill.

The field adjuster decided to revisit the scene and found the spill still there, along the curb. The adjuster took a photo and used it in negotiations with the towing contractor. The bill was reduced to $503.

The second invoice received involved an insured who was also a MetLife agent, Bodoni said. He denied his vehicle ever leaked though the $1,300 tow bill reflected a charge for a bag of absorbent, drum and included the four hour minimum charge.

The third invoice involved an insured who was a firefighter, someone experienced in handling cleanups. He didn’t see the battery acid leak described on the tow bill. According to Bodoni, because of the alleged leak the towing company refused to tow the vehicle, stating that it was a public hazard. A field adjuster sent out to the scene found no evidence of a leak or cleanup. Photos were taken and the bill was negotiated from $1,732 down to $252.

The first three invoices came out of the same company, Bodoni said.

A result of MetLife’s tow bill scrutiny program, the company began requiring that tow companies take before and after photos documenting spills.

One way to combat inflated charges on tow bills is by reviewing the Department of Environmental Protection website for the applicable state. The department provides information on what constitutes a hazardous or toxic material, Bodoni said. Antifreeze is not considered toxic or hazardous. An adjuster may even find typical charges for cleanup. Local fire departments are also good sources, Bodoni said.

Overall, the actual towing charges seemed reasonable, Bodoni said. Of the more than 20 cases reviewed, $25,000 was billed as hazardous material cleanup and just under $10,000 was paid due to bills being negotiated or denied. According to Bodoni, there may be a deterrence effect as bills from local towers now reflect a $45 charge for environmental cleanup.

Bodoni offered some tips on investigating inflated tow bill charges:

1. Determine the circumstances of recovery, including the terrain, locale and hazardous material.
2. Confirm the date of loss.
3. Find out who called the tow company.
4. Find out when the tow company responded to the scene.
5. Determine if the insured signed anything.
6. Determine the type of equipment/vehicles used and whether each was necessary to the recovery effort.
7. Verify the number of employees used in the recovery and how long each was on site.
8. Clarify the work performed.
9. Verify whether cleanup was performed.
10. Obtain any photos taken of the scene.
11. Verify mileage claimed.

 

[HarrytheCarGeek]

And I guess this is the company they are talking about:

http://towprofessional.com/article/recovery-billing-unlimited/

 

Quote

RECOVERY BILLING UNLIMITED

By Tow Professional on November 3, 2014 in

Since 2009, Recovery Billing Unlimited, Inc. (RBU) has been hosting their Advanced Business
Management Seminars with a flawless feedback record. While other training institutions teach
you how to tow and perform recoveries the proper way, RBU teaches you how to be more
profitable using the techniques you’ve acquired by having the ability to bill for your services
rendered and ultimately obtain payment. No matter if your company is a one-truck operation, or
if your company has multiple locations and five rotators, this seminar will benefit you!

With nearly 500 towing and recovery outfits throughout the United States and Canada attending
since 2009, their name, image, and what they stand for is growing within the industry at a
tremendous pace. They are an organization dedicated to teaching fellow towers how to become
more profitable at what they do in the course of their daily business operations. In addition to
profitability, safety, training, and proper certification are key components discussed within the
seminar. RBU teaches:

• Building the proper tow and recovery business from the ground up;
• Training employees so they project a more professional image;
• Remediation of the accident scene to free you from future liability;
• Proper way of writing an acceptable recovery invoice;
• Billing on liability insurance coverage only;
• State and Federal Laws; and
• Obtaining payment for proper billing procedures.

In addition to Bob and Eric Fouquette from Big Wheel Towing & Recovery as the main instructors of the seminar, they have numerous guest speakers on hand, including Attorneys, Insurance Executives, OSHA Instructors, and even the occasional past seminar attendee that shares their experiences since they’ve taken the course.

Rumors about the course being designed to “scam” insurance companies could not be any further from the truth. In fact, the seminars teach towing and recovery companies to work with insurance companies to get them to better understand the process that went into creating the invoice set in front of them. By having an invoice complete with a detailed narrative, itemized pricing, breakdown of all equipment, and a full set of pictures, there are no unanswered questions. RBU’s main objective with hosting these seminars is to strengthen the towing and recovery industry.

The initial cost of attendance may seem a bit daunting to some companies; however, the benefits outweigh the cost tremendously. Included along with the tuition fee comes two free refresher classes for the same people from each company that attended the first paid seminar. Also, RBU stands behind each and every attendee by being on call 24/7 to answer any and all questions that may arise at a later date. As mentioned earlier, hundreds of companies have attended the seminar, and the overall consensus is 100% positive feedback.

With that being said, visit them at Booth #405 at the American Towman Exposition being hosted this year in Baltimore, Maryland. They are also hosting one of their seminars right at the American Towman Exposition on November 22 and 23, 2014, from 8 a.m. – 12 p.m. on both days. If you wish to sign up for that seminar, please contact American Towman directly. Otherwise, their next seminar will be hosted at their Massachusetts facility on January 17, 2015. Please feel free to contact Linda for more details and how to sign up at 508-763-5474.

 

[HarrytheCarGeek]

http://bigwheeltowingandrecovery.com/recovery-billing-unlimited/

 

Recovery Billing Unlimited

Instructors are Bob and Eric Fouquette from Big Wheel Towing & Recovery.

They teach:

• Remediation of the accident scene
• Proper way of writing recovery invoices
• Billing liability insurance
• Billing for vehicles that only have property damage coverage
• Obtaining payment from insurance companies

These classes are critical for you to remain in business.

Your bottom line will double.

These classes are essential for anyone interested in building a successful towing and recovery company.

Other training institutions teach you how to tow and do recoveries the proper way; we teach you how to be more profitable using the techniques you’ve acquired by having the ability to bill for your services.

Classes are limited to the first 20 companies, we recommend the company owner and the main billing clerk to attend, one price includes both individuals, class sizes are critical because of the tremendous amount of information that has to be gone over.  Two repeat classes are absolutely free.  The next class is scheduled for June 24th, 2017 at our Massachusetts facility.  We personally guarantee that you will be totally blown away at how much more successful your company will become.  Call today for your reservations: 508-763-5927 and ask for Linda. Thank You and see you at the next class!

Just a few of the hundreds of testimonials…

I had the pleasure of attending this class this weekend. The whole operation is a class act operation from top to bottom. Every company that performs any type of recovery service should take this class. The class will pay for itself on your first recovery after the class. They also teach you to be professional and take pride in what you are doing.  I can’t wait for my next recovery and implement their practices. I also see a Rotator in our future.  Thanks Bob, Eric, and Linda.

– Matt Brown’s Truck Repair, New Hampshire

 

The class is worth every hard earned penny it takes to attend. Go with an open mind and pay attention and when you get home be ready to change the way you do things. I don’t mean that they teach to use a Rotator on every job. It’s not about reinventing the wheel, just about getting paid for jobs you never did and to get paid for stuff you were already doing. I like to say I’ve been paid for several jobs since we have returned from the class that before I was taking initial tow plus title and calling the boss and being excited about getting that. This class has made our two locations stronger, and has had customers thank us for taking the time to go the extra step. Go…you won’t regret it. You will make friends for life.

– Joe’s Towing & Recovery, Illinois

 

We at Nelcon have taken this class and on a scale of 1 – 10,,,, its easily a 50+ that’s how good this class is.  If you’re serious about this business then you need this tool in your toolbox.  Eric and the entire Fouquette family are second to none.  They not only care about their business they care about the entire industry and are constantly coming up with ways to improve it for everyone!!!!  Please attend the class and I would be very shocked if you did not agree with everyone here.

– Nelcon Service Center, Connecticut

 

There is not a company out there that could not benefit from this training. We are primarily a diesel truck shop and truck road service provider. We are a small towing operation with limited equipment. Anyone that feels that without a rotator, payloader, lowboy and rolloff you are wasting your time and money has been poorly Misinformed! When you see the presentation and the hospitality they provide from Friday through Sunday in many cases, you realize their drive is not the money at all. It’s all about making the industry better as a whole. Lets face it, in this business TIME and MONEY are two things we can never have enough of, and sure as hell can’t WASTE! If you walk in with an open mind and tailor the class to your operation and resources you will see how quick the class can be paid for regardless of what you own.

– Road Rescue Towing & Recovery, Inc., New York

 

We Attended The March 19th Class And Were Completely Amazed on What We Learned In Just One Day. We Paid For The Class Before We Even Returned Home In Just One Job! The Whole Time We Were There, We Felt Like We Were in Our Own Home. You Are Truly Wonderful People! Thanks For Helping Our Industry As Professionals! To Anyone Not Sure About Taking The Class, You Can’t Afford Not To.

– AJ’s Automotive & Truck Inc., New York

[HarrytheCarGeek]

And no surprise, here are some news articles about the trend:

http://www.ctvnews.ca/canada/sketchy-6-000-bill-leads-to-call-for-more-tow-truck-regulations-1.3340610

Quote

An industry insider is calling for stricter tow truck regulations in Ontario after seeing a pattern of rising bills, including one invoice for $6,000.

Shawn Jamieson, a collision repair expert in Ottawa, says he is tired of the rising cost of tow truck bills and frequently sees invoices for more than $1,000.

“Right now, I would like to see something that is standardized across the board: a specific sort of price they need to adhere to so there is no price gouging,” Jamieson told CTV Ottawa.

According to the Provincial Towing Association, the cost for a tow is up to the individual company and could range from a few hundred dollars to $1,000, depending on the circumstances.

However, Joey Gagne, president of the Provincial Towing Association, says the $6,000 invoice seems “sketchy.”

“It included storage and other fees but didn’t explain what they were for,” said Gagne. “It wasn’t clear and it’s a bill I wouldn’t pay.”

Gagne also doesn’t believe that there needs to be price regulation for tow truck operators, but that people need to be more aware of new rules put in place to protect the consumer.

As of January, tow truck operators are now required to obtain the driver’s permission and disclose their rates before hooking up the car and taking it to a collision centre or tow truck yard.

“If I do a service, I have to provide you with an invoice,” said Gagne. “I have to tell you what I’m going to charge you and I have to get you to sign off on those charges.”

Drivers are not required to take the first tow truck that shows up to a collision, and Gagne suggests that they should call their insurance company, if possible, to see if they can find a reputable source for a tow.

According to Jamieson, there are some honest tow truck operators in Ottawa, but are being given a bad name by those who take advantage of drivers.

“There are good people who do this kind of stuff for a living,” said Jamieson. “We’d just like to see more.”

http://www.landlinemag.com/Magazine/2016/Feb/story/inflated-towing-bills.aspx

 

Quote

February 2016

 

 

 

OOIDA steps up fight against inflated towing bills

 

By Mark Schremmer, staff writer

It seemed to be a fairly routine jackknife. Only one wrecker was required at the crash scene.

But the bill for tow and recovery tells a much different story.

The truck driver, an Owner-Operator Independent Drivers Association member, was charged $29,250 by Rocky Mountain Towing after the evening accident, May 9, 2015, on Interstate 80 in Wyoming.

The bill didn't take into account the amount of labor or number of hours worked. Instead, Rocky Mountain Towing's charge was at a rate of 48 cents a pound with a minimum of 60,000 pounds. (The actual weight was roughly 45,000 pounds). That alone created a $28,800 bill. Storage at a rate of $75 per unit per day added another $450.

Often, this is the reality of nonconsensual tows.

After a wreck, truck drivers have little to no opportunity to shop for a towing company or to negotiate rates. Instead, the towing company is determined by a rotation list that is usually administered by a law enforcement agency. So the cost of service is out of the truck driver's hands.

Towing bills in the tens of thousands of dollars are frequent occurrences. OOIDA Director of State Legislative Affairs Mike Matousek said that while most towing companies are honest and provide fair rates, egregiously overcharged towing bills are way too prevalent.

"I come across a bad towing bill about every week," Matousek said. "It may be even more frequent than that."

The problem is that even with insurance, inflated bills will affect the truck driver. Some bills can be outrageous enough to bankrupt small trucking businesses.

"During a nonconsensual tow, there is usually no opportunity for motorists to negotiate services or compare prices among multiple towing operators," Matousek said. "Unfortunately, as it relates to trucking, truck drivers are routinely held responsible for towing bills that are blatantly inflated by tens of thousands of dollars, and there is often no effective or efficient recourse. The impact on small-business truckers can be financially devastating."

OOIDA, in turn, has made a point to get in the fight against inflated towing bills and to work with states to create better regulations and to remove corrupt towing companies from the rotation list.

The Association has recently filed complaints against the most blatant cases.

Last year an OOIDA member received a $53,000 towing bill in West Virginia.

The complaint questioned many of the charges billed by Hutch's Wrecker Service. Hutch's charged more than maximum permissible tariffs in several categories.

For instance, OOIDA's complaint claimed "the maximum rate for a service truck is $25 per hour. The defendant charged $200 per hour for a service truck for an overcharge of approximately $2,100."

According to the complaint, the maximum rate was exceeded numerous times. Some of the offenses include charging $90 per hour for two service trucks when the maximum rate is $25 per hour and $350 per hour for a light tower when the maximum rate is $300.

Hutch's has been involved in multiple OOIDA complaints.

"The invoice was largely permissible according to their approved rate tariffs in West Virginia," Matousek said. "They approved rates for reusable equipment. They charged $350 an hour for a portable light tower. That bill highlights why reform is needed in West Virginia. Some of the charges may have been allowed, but that doesn't mean they are reasonable charges."

A towing case last year in Deposit, N.Y., resulted in a $154,124 bill for an OOIDA member. The bill included a $92,650 charge for the "reefer trailer fee." The rate was $100 per hour for 926.5 hours, or approximately 38 days.

"Keep in mind that reefer trailer rental rates in the Deposit, N.Y., area are roughly $692 per week, $.06 per mile and $1.50 per refrigerated hour for the reefer unit," OOIDA wrote in a complaint to the New York Attorney General. "Assuming a seven-week rental with 100 miles driven and 926 refrigerated hours, the total rental cost is $5,550. Further, new high-end reefer trailers can be outright purchased for around $30,000."

Despite the arguments raised, the complaint was largely ignored.

However, some progress has been made.

A recent complaint in West Virginia against Anthony's Truck Repair led to a ruling for a $10,067 refund by the public service commission. Wyoming is in the process of implementing a law that could potentially allow fraudulent towing companies to be removed from the rotation list. Section 5514 of the FAST Act gives states the necessary authority to regulate all nonconsensual tows to protect motorists. In January, OOIDA filed comments with the Louisiana Public Service Commission in hopes of changing some of the state's nonconsensual towing regulations.

OOIDA plans to continue to make the fight against overcharged nonconsensual tows a priority throughout 2016.

"To be clear, OOIDA is not against towing operators making a living," Matousek said. "In fact, there are towing operators that are members of OOIDA. But we are against towing operators that inflate their invoices simply because they can due to inadequate state regulations or a lack of enforcement.

"I think there are some positive steps being made. You look at Wyoming, the FAST Act and the West Virginia case. We are bringing a lot of attention to this. We filed a couple of complaints in Florida. Progress is being made in Arkansas. There certainly are some states taking a good look at this issue. Overall, it's a drop in the bucket, but it is progress nonetheless." LL

 

Etc...