Should your city charge you for accidents you cause? Most Americans say ‘no’

Crawford Frazer

Are you familiar with accident response fees? Whenever you’re in an accident, it costs the city money to have fire trucks and police officers rush to the scene. Some cities are trying to make up for those expenses by sending bills to the driver who caused the accident or to his auto insurance company.

Those who disagree with these response fees derisively refer to them as “crash taxes.” And those people may be in the majority, according to a recent study by the Insurance Research Council (IRC). The IRC surveyed 1,012 adults in January 2011 — and 68 percent disagree with response fees. When the interviewers reminded their subjects that insurers getting the bill could raise rates for everyone, that number hit 69 percent.

Should your city charge you for accidents you cause? Most Americans say 'no'
Should your city charge you for accidents you cause? Most Americans say ‘no’

Explaining response fees

Accident response fees generally range from $100 to $2,000, according to the Insurance Information Institute. Sometimes, the driver gets the bill, but some cities send the bill directly to the driver’s insurance company.

The problem, according to the Insurance Information Institute, is that auto insurance was not designed to cover response fees. Third-party collection companies have been approaching municipalities and offering to collect the fees for them, in exchange for a cut. If an insurer doesn’t pay up, these companies will go after the policyholder.

The debate

At least a dozen states have enacted legislation banning municipalities from charging accident response fees, according to the American Insurance Association (AIA). New York City has been the largest municipality to recently propose them, while Arizona, Kansas and Utah all banned them in 2011. The controversy surrounding these fees has raised a number of questions. Should cities be charging for life-saving responses? Will crash taxes raise insurance premiums?

Supporters argue that, just like extra fees for sewer and trash collection, response fees should be paid by those who use the resources, according to the Insurance Information Institute. Moreover, because accident reports are prepared for the benefit of insurance companies, insurers should help foot the bill for the police officers who respond.

Opponents, like AIA, argue that police and fire departments are financed by local taxes. So, charging motorists who have gotten in accidents is, in essence, double taxation. Moreover, according to the Insurance Information Institute, accident reports also are used by local and state law enforcement for reporting requirements, by hospitals that treat the injured, by chiropractors who handle the post-accident therapy and by personal injury attorneys. As such, the Insurance Information Institute states that the costs should at least be distributed equally among all parties.

As for insurance costs, if insurers have to pay more, auto insurance premiums will go up, according to the Insurance Information Institute. When determining premiums, insurers take a slew of factors into account, from vehicle safety features to your credit history — but, traditionally, response fees have not been on that list. So, if insurers are expected to foot the bill for emergency responses, they likely will raise premiums.

In addition to heightened insurance costs, response fees raise public safety concerns, according to AIA. If insurance companies won’t pay, drivers will be left with the bill — meaning that some may hesitate to call for emergency services after a crash.

Leave a Comment