The Indiana General Assembly recently passed a ban on accident response fees and Washington-based the American Insurance Association urged Gov. Mitch Daniels (R) to sign the bill.
“A fundamental purpose of government, and in part why taxes are even collected, is to provide basic services to citizens such as police response to an accident. Applying this fee onto law abiding insurance policyholders was simply unfair double taxation and the General Assembly is to be applauded for banning it,” said John Birkinbine, AIA assistant vice president, Midwest Region. ‘We’re hopeful Gov. Daniels signs this common sense bill and eliminates this extra ‘crash tax.'”
Senate Bill 81, a bill that includes a ban on “Accident Response Service Fees,” was passed by the Indiana General Assembly with near unanimous support. The legislation prohibits local law enforcement agencies from charging a fee to accident victims for police response. If signed, Indiana will join Missouri and Pennsylvania in banning this ‘crash tax.’
“Most cities that have implemented these fees only go after citizens who have insurance. This double taxation is unfair to law-abiding citizens who purchase insurance as required by the state; meanwhile, individuals who are breaking the law by driving without insurance are not charged for these services. The right move is to ban such fees,” added Birkinbine.
The Property Casualty Insurers Association of America (PCI) also sent a letter to Gov. Mitch Daniels urging him to sign legislation (SB 81) that would prohibit local governments from charging fees for responding to traffic accidents.
We are hopeful that Gov. Daniels will sign the legislation,” said Greg LaCost, assistant vice president and regional manager for PCI. “Many residents in Indiana have expressed their opposition to local governments attempting to impose a hidden double tax on consumers that ultimately increases the cost of insurance. As a taxpaying citizen, it is not unreasonable to expect local police and fire departments to respond to an automobile accident without having to pay extra for this service. Indiana communities such as Porter, Munster and Merrillville in recent years have all rejected the accident tax. With this law, unsuspecting motorists in Indiana will not have to worry about getting hit with these fees.”
The proponents of accident response fees portray their program as ‘easy’ money for municipalities or emergency response agencies by claiming insurance companies will pay the fee and recommend targeting only non-residents. Many insurance contracts may not include coverage for these charges. For example, according to a January 2008 survey of Ohio insurance companies, insurers representing 82 percent of the market there do not cover such fees.
“Municipalities that enact this fee simply pit one community against another, likely dampen commerce, and let insurance scofflaws off the hook. We hope other states join Indiana and prohibit this ‘crash tax’,” added AIA’s Birkinbine.
The property/casualty industry in Indiana employed more than 9,900 people and paid more than $177.5 million in premium taxes alone in 2006. Additionally, insurers are a major source of capital for governmental bodies in the state. According to analysis of A.M. Best data, they held $8.1 billion in Indiana municipal bonds in 2005 – approximately 27 percent of the outstanding state and local government debt in the state.
Source: American Insurance Association
Topics Legislation
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