Are you familiar with “crash fees?” What are they? In essence, these fees are being implemented by various municipalities in different states to pay drivers who are involved in auto accidents that require police and other services. The fees for emergency response teams, paramedics, firefighters, and police are charged to anyone involved in an accident that occurred outside of the municipality. While most municipalities have adopted such fees, they only charge the nonresident who is responsible for the loss. Others, however, do not make any distinction. If you are involved in an auto accident in a municipality/town where you don’t pay taxes, the police and other respond, you will get a bill. These cities/towns also have a set amount of dollars for these crash fees in their operating budgets.
This is the subject of much controversy, and with good reason. It is seen as a punishment tax for non-residents, and sends out a clear message to those who do not want to pay it. Some wonder why they pay taxes to allow the services to be available and respond to accidents. Others question if they are double-dipping by charging for their services again when they are doing what they were established to do. Local taxes cover the cost of the service provider’s local taxes. This is something that businesses dislike greatly as it sends the message to non-residents that they should avoid. If you visit us to buy or use our services, it will be a big red flag to them.
Officials from a fire department in one of these counties said that it was unfair for local tax payers to pay for nonresidents (thus, not-tax payers) who are in need of the services. That picture is so wrong! What’s next? To determine if the person has the financial capacity to pay, the dispatcher at the police station will run one’s financials. Not so fast billing the insurance company. These fees are not covered by the standard policy. There was no section I could find that would cover these fees. It doesn’t seem like the “Supplementary payments” sections are enough. Although Limits of Liability might seem like a way to get around it, they are very limited. The liability coverage covers property damage and bodily injuries that result from an auto accident. These fees don’t cover “damage”. However, this is up to the lawyers. Crash fees to me seem almost punitive. It’s like punishing someone for not living in that municipality. Because you don’t have to pay taxes in this area, you don’t receive the public benefits. It’s a bit harsh. Insurance companies may be forced to offer the coverage as an option if this trend continues. If this is the case I can see them requesting a signed statement from their insured to cover any insured who chooses not take it. Rates will vary depending on whether they include this coverage as an optional or a part of their policy. Will go up. It’s possible!
There are 10 states that have passed laws prohibiting the imposition of crash fees within their states. People who reside there already pay taxes for these services (remember that some municipalities do not bill according to residency or fault), so it is a double taxation for them. To bill non-residents it is the “taxation without representation”.
I can’t find any information on how the municipalities determine the annual income from crash fee (numbers of accidents requiring police+ in the preceding 12 months). But they seem to have all put dollar amounts on the plus side of their budgets. However, it is worth noting that many municipalities have not received the revenue expected – often less than half. The concern is that some emergency response agencies might be called to an auto accident, even if they don’t have to, in order generate a bill. You can see how this could snowball. Not only will there be all kinds of people involved in justifying the response, but also think about a fire service responding to an unnecessarily caused auto accident and not being available to a house fire. While this may seem simplistic, it does not negate the fact that there is a potential conflict. California’s Californian municipality has decided to eliminate crash fees that were in effect for over a year. Reasons reported in the news: There were not enough accidents in the past year, which resulted in less revenue than expected. And the emergency entities are spending an inordinate amount of time trying to collect the fees. They are doing a great job. They will hopefully inspire others to make the same decision. It is almost ghoulish to anticipate a certain amount of accidents within a 12-month period, which will require police and more revenue generation.
Now, let’s say you go to one of these cities/towns for dinner. But then, there is an accident. It is a serious impact that could result in injuries and the police are called to assist. The paramedics arrive. There may be an engine fire hazard so the fire department can be called. The total expenses for police and emergency response teams are $3,500. Let’s assume it’s a fee-based area that doesn’t care about fault. You will be charged $3,500 or a percentage of it, in addition to all the inconvenience and possible injury that the accident caused. This is not covered by your auto insurance. How does that make your feel? You would probably feel the same way as me. Crash fees are Not an idea whose time has come.