Insurers Oppose Quincy’s Crash Tax Ordinance

BOSTON, Aug. 19 -- The Property Casualty Insurers Association of America issued the following news release:

Drivers unfortunate enough to have a traffic accident in Quincy could get socked with what amounts to a crash tax, according to the Property Casualty Insurers Association of America (PCI).

The City of Quincy plans to adopt an ordinance that allows the fire department to impose fees when called upon to respond to a traffic accident. The bills would be sent to drivers' insurance companies for payment.

"Imposing these fees creates a hidden tax - we call the Crash Tax," said Frank O'Brien, PCI vice president state government affairs. "It is just another way for local governments to garner revenue at the expense of the motoring public. The Fire Department's cost recovery program has many fundamental problems, but the underlying thinking behind this scheme is that there is a pool of "free money" out there for the taking, if we simply levy a charge on insurance companies. But there is no free lunch."

A significant problem with this program is that it is a form of double taxation. Public safety is the primary duty of local government and firefighting services are already paid for through property and other local taxes. By billing for these services, the city imposes a hidden, double tax on consumers that could ultimately increase the cost of insurance.

Another problem with the ordinance is that these fees do not fit under the standard definition of either property damage or bodily injury coverage. While some insurers do pay--just to make the customer happy--most do not. A survey by the Ohio Insurance Institute (OII) found that insurers representing at least 85 percent of Ohio's auto insurance market don't typically cover accident response fees that are non-medical in nature. Similar programs in other parts of the country have been dropped after significant public outrage and they failed to collect the expected revenues. To prevent this practice, 10 states have passed laws or resolutions banning the implementation of accident response fees.

"While it is understandable that with tight budgets, local officials are looking for ways to increase revenue, but charging for emergency services is not the answer," said O'Brien. "The insurance industry is committed to paying all appropriate bills and charges associated with an accident. However, public safety is a basic role of government and it is paid for through state and local taxes. These accident response fees add unnecessary costs to insurance coverage that could ultimately affect the premiums that citizens pay."

TNS cp-JF78-100820-2962769 StaffFurigay