Auto Insurance Crash-Fee Discussion Starts in New Jersey

Car in road after accidentThe city council of Salem, a small New Jersey city, is the latest governing body to institute fees for certain types of publicly provided emergency services. Under a recently passed ordinance, New Jersey auto insurance companies could receive a bill of up to $750 to compensate the city’s fire department if its services are required in the aftermath of a car accident.

Like most of the accident-response fees that have been instituted in various cities during the past year, Salem’s ordinance is a reflection of a government budget with no room for growth.

“Our hope is that the fees will eventually supplement the city’s budget for the fire department,” councilman Charles Washington Jr. told the Today’s Sunbeam newspaper. “We’re hoping that it will reduce and eventually eliminate the money in the budget allotted to the fire department. Until that time the city will continue to fund and support our firefighters.”

According to the city’s fire chief, not every incident will warrant a charge, and the bill will be imposed only on insurance companies — not drivers themselves. If the driver does not have insurance or if a policy does not cover such fees, Today’s Sunbeam reports, the bill will not be passed on to the individual driver. Opponents of the fees in other cities have contended, though, that charging insurers for the fees ultimately results in policyholders’ being charged higher premiums in order to make up for the added costs.

Accident-response fees, which have come to be known as “crash taxes,” have been implemented in a number of cities across the country, and they have been met with varying levels of approval.

A poll released by the Insurance Information Network of California showed that a majority of residents in that state opposed the fees, especially when they were told that the fees could inflate the rate increases that may come with a serious auto accident. In Huntington Beach, Calif., the city council repealed such an ordinance after large outcry from opponents.

Whether residents in New Jersey — the state with already one of the highest average cost of coverage in the nation — will accept the idea of such fees is yet to be seen.

In addition, not all insurers recognize such fees as valid, and some may simply refuse to pay.

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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