Once again, the issue of accident response fees is rearing its head after the fire department of New York City last week became the latest to propose charging motorists and ultimately their insurers for the cost of responding to accidents.
The move, while new to New York City, is not a new concept. Cash-strapped municipalities across the nation are seeking alternative revenue-generating streams.
A number of them are now billing insurers for police or fire department responses to auto accidents.
Some groups believe that these fees are necessary to maintain vital public services.
However, what municipalities may not realize is that by implementing an accident tax, they may be causing auto insurance premiums to increase.
The response to and investigation of auto accidents has long been handled by police and fire departments, supported by local taxes.
While auto insurance policies typically cover medical expenses, such as ambulance transportation, expenses related to accident response services have never been covered or charged for.
If insurers are to be expected to pay for services historically supported by local taxes, they will be forced to factor this into the cost of their auto insurance policies. In other words, premiums will have to rise to account for the additional cost component.
So, residents who are already paying for these services through local taxes will be forced to pay again via higher insurance premiums. Many view this as double dippingÃ‚ 0r a form of double-taxation.
The good news is that some state legislatures have already moved to ban municipalities from charging accident response fees. At last count, 10 states ban them.
A public hearing in Brooklyn, NY on January 14 is likely to see heated debate on the FDNY proposal.
Check out I.I.I. information on accident response fees.