Friday, March 6, 2009

Beware of the Out-Of-Towner Accident Tax!

The Association of California Insurance Companies is warning Californians of a new tax that local governments are adopting. Local governments are imposing an additional tax on people who live out of town who are involved in auto accidents. This tax is to help fund emergency services such as fire, paramedics, ambulance service, etc. Since someone involved in an accident may not live in that community, they are provided those services at the time of the accident without paying taxes to support those services in the city that the accident occurred.

So far Fresno county and the City of Modesto are the first to consider such a tax in California.

Here is one way in which this could affect you. Let say you go on vacation. You decide to drive up north from your home town of Yucaipa. You are in Modesto and you are hit by a driver that ran a red light. Paramdeics, Fire trucks, ambulances all show up. Everything gets taken care of and you get back home safe and sound. One day you are going through your mail and you get a letter from your insurance carrier. It seems that the City of Modesto is charging you $1,500 for an emergency fee. Your carrier informs you that this fee is not covered by your insurance policy and you will have to pay the City of Modesto directly.

Not what you want to hear from your insurance company after you have already paid your deductible for an accident that was not your fault is it? Sadly, with the current economic climate affecting cities, households and companies alike, I think we will see cities and counties finding new and creative ways to get funding for essential services. Since these charges are called fees and not taxes, local governments don't have to go through such a strenuous process to pass and enforce them. There are also no checks and balances and fees can vary from city to city. One town may charge $100 and the town right next to them charges $2,000. And these fees may be directed to pay for things other than emergency service since there are no checks and balances; the local government decides how to spend the money. Insurance companies may start covering these fees if this practice becomes more wide spread, but this will also raise insurance rates to cover it. Insurance companies are trying to keep cost's down, especially in these economic times. They need to keep customers happy and offer affordable insurance coverage, so they are not covering these fees right now.

One way you can help is to attend city council meetings and county public meetings and let them know you do not approve of these fees. If your community does it, then what's to stop the next town over? Do you shop in that town? Could you be in an accident there? Would you have to pay an accident fee to them because you had an accident while shopping or seeing a movie there?

Have you been hit with this fee? I'd like to hear about it since it is just now coming to California. I do know that other places in the country have had it up and running for a while now.

Check out for more info and to see how you can get involved.