Kansas Could be Third State This Year to Adopt a ‘Crash Tax’ Ban

[For an update on recent action taken related to this bill, read the article "Kansas ‘No Pay, No Play’ and ‘Crash Tax’ Bills Signed into Law"]

If Gov. Sam Brownback signs into law a bill passed on Monday by the house, cities and towns in Kansas would be barred from charging drivers and their auto insurance companies for emergency response to a car crash.

If the bill is signed into law, Kansas would become the third state this year to establish a ban on accident response service fees, which have come to be known throughout the insurance industry as “crash taxes.” Utah instituted a similar ban in March, and Arizona did the same in April.

Severe accident scene

Municipalities would still be able to charge drivers and insurers for "ambulance and emergency services when immediate action is required to save life, prevent suffering or disability or to protect and save property."

The accident response service fees banned in the Kansas legislation are defined as any fee levied on a driver or his or her insurer for the cost of a city’s emergency response to an accident. Municipalities could still bill a driver or insurer, though, for the cost of ambulance services and the cost of other measures taken to “save life, prevent suffering or disability or to protect and save property.” Only fees billed strictly for the cost of the response itself would be banned under the bill.

Kansas lawmakers overwhelmingly supported the ban. The final vote in the senate was 34-5, and the final vote in the house was 118-1.

Emergency response fees have come under fire across the country in recent years.

Initially implemented to help plug city budget holes, the fees have been called a form of double taxation, since residents have already paid for the costs of fire and police department services through local taxes and then get charged a second time when they need to use those services after a crash.

Representatives from insurance companies and associations have lobbied at the state and city level to have the fees banned. The Property Casualty Insurers Association of America (PCI) in particular has been an active advocate. The association says policies typically do not provide coverage for municipal fees and points out that insurers’ covering the fees pumps up the average claim size and could ultimately lead to restricted access to inexpensive car insurance.

The PCI is currently lobbying to get a similar ban passed in California. According to the insurer association, at least 12 states have already taken legislative action to restrict the implementation of the fees.

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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