Thursday, 11 August 2011 08:51

New York Considers “Crash Tax” for Accident Victims

“Crash taxes,” or accident response fees, are sweeping the nation. Cities in 27 states have adopted them in one form or another, including Dallas, Texas; Buffalo, New York; Toledo, Ohio; and New Haven, Connecticut.

But not every state has been eager to bill those involved in motor vehicle accidents for the services of responding firefighters and police officers. According to Property Casualty Insurers Association of America, 13 states, including neighboring Pennsylvania, have outlawed accident fees, preventing their municipalities from billing those injured in motor vehicle accidents for fire and police department services. New York may be the 14th state to ban crash taxes.

A Crash Tax for New York City?

Earlier this year, New York City Mayor Michael Bloomberg proposed that drivers be assessed an accident response fee when the New York Fire Department (NYFD) responds to an accident or car fire. The proposal basically meant that if the NYFD responded to: – A vehicle fire or car accident with injuries, then drivers would receive a bill for $490.
- A fire without injuries, those involved would receive a bill for $415.
- An accident without injuries, motorists would be assessed a crash tax of $365.

The thought behind charging accident fees was to shift the burden from having taxes cover the cost of the NYFD’s services to having the people responsible for car accidents pay for those services.

Insurance industry representatives and city council members are against the accident response fees, seeing them as a form of double taxation. The president of the New York Insurance Association noted that “New Yorkers pay taxes expressly designed to cover municipal services and would then be charged again for accident responses.” Furthermore, another insurance industry spokesman points out, it is not the cities that are coming up with these ideas — vendors who collect the bills (for a percentage) are the ones pitching the idea to municipalities.

Many cities, including New York City, grab onto the idea because they are facing funding shortages. The 2012 fiscal year starts July 1, and NYC is facing a $2.4 billion deficit. The NYFD has been asked to slash $58 million from its annual costs. The hope is, of course, that accident response fees would help make up this difference.

How Effective Are Accident Response Fees?

Consumers assessed fees usually try to pass them onto their auto insurance companies, but the insurers often refuse to pay them — leaving motorists to foot the bill themselves or litigate over the matter. And even when insurers do pay them, they pass the expense right back to their policyholders by increasing auto insurance premiums.

Several cities that have tried to implement fees for responding to accidents are quickly finding them to be a bad idea. Oceanside, California, recently decided to eliminate its crash tax after discovering that not only has it been very difficult to actually collect the fees, but it was also impacting tourism, as the fees there are assessed only against nonresidents, so tourists try to avoid passing through the city.

Firefighters in municipalities that have adopted the fees are also finding frustration with the idea, as they have to spend more time on the accident scene, gathering information so that they know where to send the bill.

So, What Is Next for Those Involved in Accidents in New York?

Given the New York City Council’s opposition to the crash tax, Mayor Bloomberg has backed off the proposal, according to Property Casualty 360. In fact, the New York State Legislature now has a bill before it — Bill S2277 — that would add a section to New York’s Vehicle and Traffic Law prohibiting municipalities from imposing accident response fees.

It should be noted that the new law, if passed, would likely not affect the current ability of local governments in New York to charge motorists involved in accidents for ambulance services, cleanup of hazardous chemicals or damage to municipal property.

Article provided by Colwell, Colwell & Petroccione, LLP
Visit us at www.colwell-law.com