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PCI Cautions Labor Day Motorists that Many Cities Now Charge a Crash Tax

Source: PCI

Posted on 01 Sep 2010

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While Labor Day marks the end of the summer driving season, the Property Casualty Insurers Association of America (PCI) is informing drivers that there is no end in sight to the growing trend of local governments charging fees for routine police or fire department responses to traffic accidents.

AAA is projecting that approximately 31.4 million people will be taking trips and reaching their destination by driving this Labor Day weekend. According to AAA, this is an increase of 10.3 percent from last Labor Day.

“With more people on the roads, often driving in unfamiliar territory, the potential for crashes increases and we encourage all drivers to use caution this weekend,” said Bob Passmore, senior director of personal lines for PCI. “To reduce the risk of accidents, defensive driving should be a high priority for motorists right along with seat belt use, avoiding distractions and obeying all traffic laws. However, if you are unfortunate enough to be in a crash, drivers should be aware that an increasing number of local governments around the country, and particularly in California, will charge what we call a ‘crash tax’ when police or fire department personnel respond to a traffic accident.”

Crash taxes are a back door way for local governments to garner revenue at the expense of the motoring public. Public safety is the primary duty of local government and police or firefighting services are already paid for through property and other local taxes. By billing for police or fire department services, local governments are imposing a hidden, double tax on consumers.

In some cases, local governments impose a tax which can be $2,000 or more. Some local governments levy the fee on all accident victims while others just charge out-of-town drivers. Still others target at-fault drivers or accidents that involve fires or spill cleanups. These fees are often charged to insurance companies. But often these costs are not covered by insurance, which could leave the accident victim facing a bill.

Most recently the city of Quincy, Massachusetts in the Boston area and Huntington Beach near Los Angeles adopted crash tax ordinances. The city of Tempe, Arizona is considering using crash taxes to plug a budget shortfall and the city council in Sacramento, California is scheduled to debate the issue September 14. Nearly 40 local governments in California have either enacted or are considering the enactment of crash tax ordinances. Other major cities that have recently rejected this idea are Denver and Tulsa where the proposals generated a significant amount of public opposition. Additionally, 10 states restrict local governments from charging accident response fees. Legislation is already in effect in Alabama, Arkansas, Florida, Georgia, Indiana, Louisiana, Missouri, Oklahoma, Pennsylvania and Tennessee.

“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 Passmore. “The crash tax adds insult to injury by victimizing drivers twice – once by being in an unfortunate accident and then again with a fees.”