Arizona Enacts Ban on Crash-Response Fees

Cities, towns and municipalities will be barred from billing Arizona drivers and their auto insurance companies for crash-response fees after Gov. Jan Brewer signed into law Wednesday a bill banning their implementation.

[This story was updated on April 14, 2011, at 1:15 p.m. to reflect the current status of the legislative push]

Crash-response fees — which also go by the names of “emergency-response fees,” “accident-response fees” and “crash taxes” — are fees that some cities and counties across the country levy on motorists in order to reclaim the cost of dispatching police and firefighters to the scene of an accident.

This type of fee has become increasingly widespread in the past decade as local governments have been looking for ways to plug budget holes that have emerged as a result of ailing tax revenue streams. No municipalities in Arizona reportedly charge such fees as of yet, so the law to limit them is a preventative measure. According to the Ohio Insurance Institute, Arizona is the latest of at least 11 states that have passed legislation to limit the application of the fees.

The bill’s primary sponsor, Rep. John Kavanagh, told the House Transportation Committee that he proposed the ban for the same reason that many other citizens and insurers oppose the fees. He called them a “double charge,” noting that residents and non-residents already fund publicly provided emergency-response services through sales and property taxes.

He also went on to cite concerns that the response fees, which range from hundreds to thousands of dollars, could ultimately deter motorists from calling 911 after a crash out of financial concerns.

“It’s very dangerous when you start charging for necessary services that are already payed with taxes,” Kavanagh said.

Another factor in the debate was highlighted in a poll conducted by the Property Casualty Insurers Association of America (PCI) earlier this year: If crash-response fees were to be routinely tacked on to the cost of car crashes, it could push up the average claims size and, consequently, negatively affect Arizona auto insurance rates.

When the PCI asked more than 1,400 citizens whether they agree or disagree with the practice, 60 percent said they opposed it. That number jumped an additional six percentage points when they were told that it could drive insurance rates upward.

The new law does include a number of exemptions, though, that allow fees to be charged under certain circumstances. A few examples are when they are levied for ambulance services, property damages and when cities provide the services to nearby areas that lack the resources to provide response services.

While Rep. Kavanagh said that the exemptions “technically violate the principle” of the law, he noted that they are there for a good reason.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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