Kansas ‘No Pay, No Play’ and ‘Crash Tax’ Bills Signed into Law

Gov. Sam Brownback signed into law last week a pair of insurance-related bills that in effect limit the economic recovery rights of cities and uninsured drivers.

Both of the bills — one instituting a “no pay, no play” statute and the other barring cities from charging “crash taxes” — reflect similar legislative pushes cropping up in a handful of states across the country. According to the Property Casualty Insurers Association of America (PCI), these bills can help keep affordable car insurance available through their capacity to keep the average claim size from ballooning.

The new “no pay, no play” law will, according to supporters, level the playing field by keeping drivers who fail to satisfy the state mandate to purchase auto insurance from benefiting from other drivers’ compliance with the law.

Under the new law, drivers who lack a basic, state-required personal injury protection (PIP) policy at the time of an accident will not have the full ability to sue for losses. Instead of being able to sue both for losses that are economic (property repairs, medical bills, etc.) and noneconomic (pain-and-suffering, loss of companionship, etc.), they will only be able to successfully collect for economic damages.

Supporters say that “no pay, no play” laws help the average consumer by providing a disincentive for motorists to drive without coverage and by reducing claim costs.

Oklahoma, Minnesota and Tennessee are considering similar bills. A ‘no pay, no play’ bill was passed by the Montana State Legislature, but it was ultimately vetoed by the governor.

The Kansas law will contain an exception, however. If the uninsured driver was uninsured for 45 days or less at the time of the accident and had been insured for the year prior to that period, he or she would still be able to collect for noneconomic damages.

About 1 in 10 drivers in the state were uninsured in 2009, according to the Insurance Research Council.

HB 2119, the second of the two bills, stops municipal entities in the state from charging drivers and their insurers fees for responding to the scene of an accident. The fees, commonly referred to as “emergency response fees” or “crash taxes,” have been a source of debate in recent years as cash-strapped cities have been implementing them in order to close up budget holes.

Kansas is now one of about a dozen states that have taken legislative action against the fees. Emergency service providers will still be able to bill insurers for things like ambulance services and hazmat cleanup, but a charge solely for responding to the scene of an accident will be prohibited.

Supporters of the legislation say that asking drivers for hundreds of dollars in fees for the cost of emergency response could eventually make motorists hesitant to call 911 after a crash. Others also said that, if insurers were to  begin routinely paying the fees, it could inflate the average claim size and result in higher insurance premiums.

Arizona and Utah passed similar bans earlier this year.

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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