Poll: Consumers Agree with Insurers’ Opposition of Crash Taxes

car accident sceneResults of a new survey conducted by the Insurance Research Council (IRC) indicates the majority of American oppose accident response fees. These fees are imposed by local governments on drivers for the cost of dispatching police and fire departments to the scene of car accidents.

The poll was conducted by phone in January and included just over 1,000 respondents.

A little more than two-thirds of those surveyed said they disagreed with the idea that local governments should charge such fees.

Car insurance companies have for years been opposing the accident-response charges, and groups like the Property Casualty Insurers Association of American have been lobbying hard at the state and local levels to get laws banning the fees on the books.

Supporters of the fees say that responding to car accidents uses city resources that are heavily strained in an era of ever-tightening budgets and that they are justified in seeking to recoup these expenses.

Opponents tend to make two main arguments against the fees.

First, they say that accident response fees — also referred to as “crash taxes” — are a form of double taxation, since city residents already fund emergency services through sales and property taxes and then have to pay for them again through emergency response fees.

Second, members of the industry repeatedly point out that the fees could affect consumers’ coverage costs, since the availability of low cost auto insurance is closely tied with the size of the average claim.

Insurers usually operate with a target profit margin, so when they have to pay out more money on claims on a large scale, they may raise rates in order to balance out their loss-to-premium ratio. If emergency response fees were to be routinely covered by insurance, they argue, the average claim size would almost certainly go up, as would premiums.

About a dozen states have taken legislative action to ban the fees. Arizona, Utah and Kansas have signed bans into law so far this year.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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