California body shop laws: what insurers and shops must do

What it means in California

The insurer can't require your customer, insured or third-party claimant, to use a particular shop. It can't even recommend one unless your customer asks for a referral or has been told in writing that they can pick the shop. Once your customer has chosen you, the insurer can't suggest they switch. If your customer accepts the insurer's recommended shop, the insurer must restore the car to pre-loss condition at no extra cost beyond the policy.

If the customer accepts the insurer's recommended shop, the insurer must restore the car to its pre-loss condition at no added cost beyond the policy. Insurers must also give the Auto Body Repair Consumer Bill of Rights.

The law's own words

“No insurer shall require that an automobile be repaired at a specific automotive repair dealer, as defined in Section 9880.1 of the Business and Professions Code.”

Cal. Ins. Code 758.5, effective 1/1/2010

“No insurer shall suggest or recommend that an automobile be repaired at a specific automotive repair dealer unless either of the following applies:”

Cal. Ins. Code 758.5, effective 1/1/2010

“after the claimant has chosen an automotive repair dealer, the insurer shall not suggest or recommend that the claimant select a different automotive repair dealer.”

Cal. Ins. Code 758.5, effective 1/1/2010

What it means in California

After a covered collision or physical damage loss, the insurer must pay reasonable towing and storage needed to protect the car, including on third-party claims, where payment can be reduced by fault. Before it stops paying storage, it must give your customer reasonable notice and time to move the car; no number of days is set. Storage you charge the lender or lessor on the title must be reasonable; after 15 days, it runs only from 3 days after your certified-mail notice to them.

Vehicle Code 10652.5 limits storage charged to the legal owner, meaning the lienholder or lessor, not the registered owner. The insurer rule also covers third-party claims, where payment may be prorated by fault.

The law's own words

Shop

“no fee or service charge may be imposed upon the legal owner for the parking and storage of the motor vehicle except as follows: (1) The first 15 days of possession and (2) following that 15-day period, the period commencing 3 days after written notice is sent by the person in possession to the legal owner by certified mail, return receipt requested”

Cal. Veh. Code 10652.5, effective 1/1/2026

Shop

“All storage and towing fees charged to a legal owner of a motor vehicle shall be reasonable. The following rates and fees are presumptively unreasonable:”

Cal. Veh. Code 10652.5, effective 1/1/2026

Insurer

“After a covered loss under a policy of automobile collision coverage or automobile physical damage coverage as defined in California Insurance Code Section 660 , where towing and storage are reasonably necessary to protect the vehicle from further loss, the insurer shall pay reasonable towing and storage charges incurred by the claimant.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Insurer

“The insurer shall provide reasonable notice to the claimant before terminating payment for storage charges, so that the claimant has time to remove the vehicle from storage.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

What it means in California

Your lien lasts only as long as you keep the car. Once you let the customer drive it away, the lien is gone and you can no longer sell the car under it. The exception: if you lost the car through trick, fraud or device, getting it back revives the lien, though it ranks behind good-faith interests acquired in the meantime. If the owner approved the work, you also lose the lien unless you apply for lien-sale authorization or file in court within 30 days. An unregistered repair dealer has no lien at all.

Vehicles worth $4,000 or less follow Civil Code 3072. An unregistered repair dealer has no lien and cannot charge storage. A returned Declaration of Opposition sends the sale to court. After a sale the owner may redeem within 10 days.

The law's own words

Keep the car

“(a) Every person has a lien dependent upon possession for the compensation to which the person is legally entitled for making repairs or performing labor upon, and furnishing supplies or materials for, and for the storage, repair, or safekeeping of, and for the rental of parking space for, any vehicle of a type subject to registration under the Vehicle Code, subject to the limitations set forth in this chapter.”

Cal. Civ. Code 3068, effective 1/1/2008

Limit

“(a) A person required to have a valid registration under the provisions of this chapter shall not have the benefit of any lien for labor or materials, including the ability to charge storage fees in accordance with applicable laws, or the right to sue on a contract for motor vehicle repairs unless the person possesses a valid registration.”

Cal. Bus. & Prof. Code 9884.16, effective 1/1/2024

Sell or title it

“Any lien under this section that arises because work or services have been performed on a vehicle with the consent of the registered owner shall be extinguished and no lien sale shall be conducted unless either of the following occurs: (A) The lienholder applies for an authorization to conduct a lien sale within 30 days after the lien has arisen. (B) An action in court is filed within 30 days after the lien has arisen.”

Cal. Civ. Code 3068, effective 1/1/2008

Sell or title it

“A lienholder shall apply to the department for the issuance of an authorization to conduct a lien sale pursuant to this section for any vehicle with a value determined to be over four thousand dollars ($4,000).”

Cal. Civ. Code 3071, effective 7/30/2001

Sell or title it

From a list that begins: “(c) The notice required pursuant to subdivision (b) shall include all of the following statements and information:”

“(2) The person has a right to a hearing in court. (3) If a hearing in court is desired, a Declaration of Opposition form, signed under penalty of perjury, shall be signed and returned to the department within 10 days of the date that the notice required pursuant to subdivision (b) was mailed.”

Cal. Civ. Code 3071, effective 7/30/2001

Keep the car

“Whenever the possessory lien upon any vehicle is lost through trick, fraud, or device, the repossession of the vehicle by the lienholder revives the possessory lien but any lien so revived is subordinate to any right, title, or interest of any person under any sale, transfer, encumbrance, lien, or other interest acquired or secured in good faith and for value between the time of the loss of possession and the time of repossession.”

Cal. Civ. Code 3070, effective 1/1/1995

What it means in California

In California, the insurer can't require non-OEM aftermarket crash parts unless your customer is told in a written estimate before repairs. Those parts must be at least equal to OEM in kind, quality, safety, fit and performance, and the insurer must state in its estimate that it warrants this. If a part falls short, the insurer pays to return it and replace it. Your estimate must say whether each crash part is OEM or non-OEM.

The disclosure document must be in 10-point type or larger and say any warranty comes from the parts maker or distributor, not the car maker. The insurer that specifies non-OEM parts also pays for any modifications needed to make them fit, and your invoice must also say whether crash parts are OEM or non-OEM.

The law's own words

Insurer

“No insurer shall require the use of nonoriginal equipment manufacturer aftermarket crash parts in the repair of an insured’s motor vehicle, unless the consumer is advised in a written estimate of the use of nonoriginal equipment manufacturer aftermarket crash parts before repairs are made.”

Cal. Bus. & Prof. Code 9875.1

Shop

“Each crash part shall be identified on the written estimate and the written estimate shall indicate whether the crash part is an original equipment manufacturer crash part or a nonoriginal equipment manufacturer aftermarket crash part.”

Cal. Bus. & Prof. Code 9884.9, effective 1/1/2019

Parts standard

“(g) No insurer shall require the use of non-original equipment manufacturer replacement crash parts in the repair of an automobile unless all of the following conditions are met: (1) the parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance;”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Insurer

“The insurer must disclose in writing, in any estimate prepared by or for the insurer, the fact that it warrants that such parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance;”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Insurer

From a list that begins: “In the repair of a particular vehicle, an insurer specifying the use of a non-original equipment manufacturer replacement crash part that is not equal to the original equipment manufacturer part in terms of kind, quality, safety, fit, and performance, or does not otherwise comply with this section,”

“shall pay for the costs associated with returning the part and the cost to remove and replace the non-original equipment manufacturer part with a compliant non-original equipment manufacturer part or an original equipment manufacturer part.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

What it means in California

California doesn't require an appraisal clause. On your customer's own total loss, if they tell the insurer within 35 days that they can't buy a comparable car for the settlement, it must reopen the claim and then find one, pay the difference or buy the car, or invoke the policy's appraisal provision; that choice is the insurer's. If your written estimate is higher, it must pay the difference, name a shop that will match its estimate, or reasonably adjust yours. Unreasonably low offers are prohibited.

The 35-day reopening and the appraisal option apply to first party total loss claims, and the insurer need not act if it named a specific available comparable car at the final offer. The estimate rule in 2695.8(f) applies to partial losses settled on an estimate prepared by or for the insurer.

The law's own words

Other dispute rules

“In first party automobile total loss claims, every insurer shall provide notice to the insured at the time the settlement payment is sent or final settlement offer is made that if notified by the insured within thirty-five (35) calendar days after the insured receives the claim payment or final settlement offer that said insured cannot purchase a comparable automobile for the gross settlement amount, the insurer will reopen its claim file.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

How appraisal works

From a list that begins: “If subsequently notified by the insured the insurer shall reopen its claim file and utilize the following procedures:”

“(2) The insurer shall either pay the insured the difference between the amount of the gross settlement and the cost of the comparable automobile which the insured has located, or negotiate and purchase this vehicle for the insured; or, (3) The insurer shall invoke the appraisal provision of the insurance policy.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Other dispute rules

“If the claimant subsequently contends, based upon a written estimate that the claimant obtains, that necessary repairs will exceed the written estimate prepared by or for the insurer, the insurer shall: (1) pay the difference between the written estimate and a higher estimate obtained by the claimant; or,”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Other dispute rules

“(2) if requested by the claimant, promptly provide the claimant with the name of at least one repair shop that will make the repairs for the amount of the insurer's written estimate. The insurer shall cause the damaged vehicle to be restored to its condition prior to the loss at no additional cost to the claimant other than as stated in the policy or as otherwise allowed by law.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Other dispute rules

“(g) No insurer shall attempt to settle a claim by making a settlement offer that is unreasonably low.”

10 CCR 2695.7, effective 8/30/2006 (Cornell LII copy)

What it means in California

In California, a labor rate survey is the insurer's choice, but one that sets a prevailing rate must be reported to the Department with shop names. In the standardized survey, the prevailing rate is the rate at or below which a simple majority of surveyed shops charge. To cut your rate using it, the insurer must show your rate is above that rate, your posted rate, or what you charged in the last 60 days, and the cut doesn't mean you must accept it.

A standardized survey gives the insurer a rebuttable presumption of good faith on the labor rate only if it meets 2695.81's standards, including filing no more than a year old and rate data no older than 16 months (extendable to 2 years and 28 months with an inflation adjustment), and it can't use discounted direct repair program rates. The insurer may pay less than the prevailing rate if your shop charges less.

The law's own words

Survey or rate standard

“Any insurer that conducts an auto body repair labor rate survey to determine and set a specified prevailing auto body rate in a specific geographic area shall report the results of that survey to the department, which shall make the information available upon request. The survey information shall include the names and addresses of the auto body repair shops and the total number of shops surveyed.”

Cal. Ins. Code 758, effective 1/1/2001

Survey or rate standard

“establish a standardized labor rate survey that the Commissioner recommends insurers use as a basis to settle or pay automobile repair insurance claims in a fair and equitable manner, if the insurer elects to use a survey”

10 CCR 2695.81, effective 1/1/2017 (PDF)

Survey or rate standard

“For purposes of a Standardized Labor Rate Survey, “prevailing auto body rate” or “prevailing rate” shall be calculated as the labor rate at or below which a simple majority of surveyed shops charge in a specific Geographic Area, as defined in subdivision (d)(8)(A)4.”

10 CCR 2695.81, effective 1/1/2017 (PDF)

What the insurer pays

“An insurer may use a Standardized Labor Rate Survey as a basis to reasonably adjust the labor rate in a written estimate provided by a claimant’s chosen repair shop pursuant to subdivision (f)(3) of Section 2695.8 only if the insurer can demonstrate at least one of the following:”

10 CCR 2695.81, effective 1/1/2017 (PDF)

What the insurer pays

“This subdivision (e) shall not be construed to imply that the repair shop must accept the amount offered for payment by the insurer or that the amount charged by the repair shop is excessive or unreasonable”

10 CCR 2695.81, effective 1/1/2017 (PDF)

What it means in California

California bars capping paint and materials. The insurer can't offer or pay an amount for paint and materials that isn't tied to a method for figuring those charges that shops and insurers accept. Its own estimate also can't depart from its estimating software's standards and costs if that would leave too little for a proper repair. When it adjusts your estimate, it must show each change and what it costs.

Section 758.6 took effect January 1, 2009; its text does not itself state a penalty or a right to sue. The text does not say which methodologies count as accepted by shops and insurers; that's a question for the Department of Insurance or a lawyer.

The law's own words

Capping rule

“Insurers shall not engage in capping. For the purposes of this section, “capping” means offering or paying an amount that is unrelated to a methodology used in determining paint and materials charges that is accepted by automobile repair shops and insurers.”

Cal. Ins. Code 758.6, effective 1/1/2009

What the insurer pays

“An insurer shall not prepare an estimate that deviates from the standards, costs, and/or guidelines provided by the third-party automobile collision repair estimating software used by the insurer to prepare the estimate, if such deviation would result in an estimate that would not allow for repairs to be made in accordance with accepted trade standards for good and workmanlike automotive repairs by an auto body repair shop, as described in this subdivision.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Related claim rule

“The adjusted estimate shall identify the specific adjustment made to each item and the cost associated with each adjustment made to the claimant's shop's estimate.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

What it means in California

The insurer must acknowledge a claim and start investigating within 15 calendar days. On a first-party claim, if it wants to inspect the car, it must ask and inspect within 6 business days. It must accept or deny within 40 days of proof of claim and pay within 30 days of accepting, but those two deadlines exclude collision and comprehensive auto repair bills subject to Insurance Code Section 560. The penalty is a state fine up to $5,000 per act, $10,000 if willful; no interest.

The 40-day and 30-day time frames exclude automobile repair bills under collision and comprehensive coverage subject to Insurance Code Section 560, which is not in the captured law; whether a given auto claim falls under that exception is a question for the Department of Insurance or a lawyer. On third-party claims, the 6-business-day inspection window runs from when the insurer decides to inspect. The 15-day acknowledgment duty does not apply to a notice of legal action.

The law's own words

If late

“Any person who engages in any unfair method of competition or any unfair or deceptive act or practice defined in Section 790.03 is liable to the state for a civil penalty to be fixed by the commissioner, not to exceed five thousand dollars ($5,000) for each act, or, if the act or practice was willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each act.”

Cal. Ins. Code 790.035, effective 9/25/1989

Respond

“Upon receiving notice of claim, every insurer shall immediately, but in no event more than fifteen (15) calendar days later, do the following unless the notice of claim received is a notice of legal action: (1) acknowledge receipt of such notice to the claimant unless payment is made within that period of time.”

10 CCR 2695.5, effective 7/23/2003 (Cornell LII copy)

Accept or deny

“Upon receiving proof of claim, every insurer, except as specified in subsection 2695.7 (b)(4) below, shall immediately, but in no event more than forty (40) calendar days later, accept or deny the claim, in whole or in part.”

10 CCR 2695.7, effective 8/30/2006 (Cornell LII copy)

Accept or deny

From a list that begins: “(B) In the case of first-party claims only:”

“1. Initial inspection. Except as provided in Subdivision (e)(4)(B)2. or (e)(4)(B)3. of this section, if an insurer chooses to exercise its right to inspect the damaged vehicle, the insurer shall within six (6) business days after receiving the notice of claim: a. request of the claimant that the claimant make the vehicle available for inspection by the insurer, and b. provided the claimant makes the vehicle reasonably available for inspection, inspect the damaged vehicle.”

10 CCR 2695.8, effective 1/1/2017 (Cornell LII copy)

Pay

“Upon acceptance of the claim in whole or in part and, when necessary, upon receipt of a properly executed release, every insurer, except as specified in subsection 2695.7 (h)(1) and (2) below, shall immediately, but in no event more than thirty (30) calendar days later, tender payment or otherwise take action to perform its claim obligation.”

10 CCR 2695.7, effective 8/30/2006 (Cornell LII copy)