Oklahoma Farm Bureau Mutual Insurance Company has filed a “friend of the court” brief supporting that state’s legislation capping storage fees, a law being challenged in court by 12 Oklahoma collision repair shops and a state body shop association.
The cap on storage fees took effect last November. It limits storage fees for total loss vehicles to $39 a day for the first 10 days (and $75 a day after 10 days). It also caps billable administrative labor for total loss vehicles at four hours. The legislation was introduced last year by a Republican lawmaker in Oklahoma — who is also an insurance agent — and was passed by both chambers of the state legislature, becoming law without the governor’s signature.
The collision repair plaintiffs argue that the law is unconstitutional in that it singles out one type of business “for special and harsh treatment,” without imposing the same limits on other businesses such as salvage yards, mechanical shops or dealerships “who also deal with insurance companies while it is being decided if a damaged vehicle is a total loss or repairable.” The limit does not benefit the consumer, they argue, only insurance companies.
The insurer’s argument
While it is the Oklahoma Insurance Department and the state named as defendants in the lawsuit, Oklahoma Farm Bureau petitioned the court to file an “amicus brief” this month to voice its support for the new law.
The insurer told the court that the state’s legislature “exercised its broad authority and discretion to address the unfair, unreasonable storage fees charged by autobody repair shops” paid by insurers and “oftentimes passed along to Oklahoma consumers via increased premiums.”
“Auto body repairs [sic] shops still store vehicles ultimately deemed a total loss, and those shops should be, and still are, compensated for doing so,” the insurer states in its brief. “The [law] simply placed a cap on storage fees involving a total loss, so that Oklahoma insureds do not face the brunt of increased insurance costs.”
The brief cites several examples of what Oklahoma Farm Bureau sees as the basis for the legislation, including a shop charging $250 a day ($8,000 in total) in 2025 for storage of a 2017 Ford Explorer deemed a total loss. In another example, a shop charged five days of inside storage (at $150 per day) and 28 days of outside storage (at $100 per day) for a total of $3,550 in storage charges for a 2021 Jeep Wrangler determined to be a total loss.
Shops can, of course, disagree with the new law, the insurer argues in its brief, but whether it “is a good idea is not within the Court’s authority to decide,” but rather “a suggested change in the law should be addressed by the legislature.”
Oklahoma Farm Bureau is the seventh largest personal auto insurer in the state with about 3.6 percent market share, less than No. 6 Geico (with 5.3 percent market share) but more than No. 9 Liberty Mutual (2.8 percent).
The American Property Casualty Insurance Association has also petitioned the court to file an amicus brief as well.
Both sides in the lawsuit have asked the state district court for summary judgment based on their filings in the dispute. Under a summary judgment, a court decides before trial “there are no genuine issues of material fact and [therefore one side in the dispute] is entitled to judgment as a matter of law.” The Oklahoma Insurance Department had sought outright dismissal of the lawsuit, but that motion was denied in June.
The Department of Insurance argues the law is not discriminatory because it applies uniformly to all body shops and addresses something that “has proven susceptible to abuse at the expense of Oklahoma consumers.” Reasonable restrictions (on “unsound business practices”) made to promote the greater public good do not amount to “arbitrary and unconstitutional deprivation of any individual protected interest” as the plaintiffs allege, the Department argues.
Latest in second lawsuit by shops
In a similar lawsuit in which the collision repairers are challenging the constitutionality of another recently enacted Oklahoma law banning the use of assignment of proceeds, the Oklahoma Insurance Department has asked the court to deny the shops’ motion for summary judgment and instead enter summary judgment in the state’s favor.
“In this case, the Legislature acted squarely within its authority to address the proliferation of exploitative assignment of benefit agreements, which — as explained by the bill’s legislative author –— ‘give broad powers to contractors and body shops that have abused them by inflating invoices [and] charged for work that was not done and sometimes unnecessary,’” the Department argues in its court filing.
The law, which also took effect last November after being passed by lawmakers and signed into law by Governor Kevin Stitt, is not discriminatory, the Department told the court in its filing. It states the law is one that “treats similarly situated entities alike by applying uniformly to all contractual insurance relationships within the state, while granting special privileges to no single entity or industry.”
John Yoswick