Topeka, KS (WiredPRNews.com) The Kansas legislature earlier this week approved a bill that would ban cities, towns and other municipalities from charging drivers and their insurers for the cost of fire and police departments’ response to car accident scenes.
By signing the bill into law, Kansas would become the third state this year to ban such fees. The fees, often referred to as “crash taxes,” have received opposition from many groups in the auto insurance industry, who say that they amount to double taxation and have the potential to impact the price of coverage.
Those who have an accident affecting insurance premiums can easily see how their crash has caused them to pay more. A California premium analysis* conducted by OnlineAutoInsurance.com showed that having one accident without injuries on a policyholder’s record can increase average premiums by nearly one-third. The site also found that having an accident with injuries on record can increase the average premium quote by around 70 percent.
But the effects of having higher per-claim costs due to the addition of emergency response fees are harder to see. That’s because most of it is on the insurer side. Higher average claims sizes means higher costs to the insurer, which impacts its loss ratio. Insurance companies want to maintain a certain loss ratio in order to stay profitable. And if insurers were to make emergency response fees a regularly covered item, it could throw off the loss ratio to an extent and could ultimately cause the company to charge a higher base rate for policies.
At least 12 states have taken action to limit municipalities’ ability to charge emergency response fees.
To learn more about this and other insurance issues, readers can go to http://www.onlineautoinsurance.com/learn/how-accidents-affect.htm where visitors will find informative resource pages and a quote-comparison generator that can help users find affordable rates for a policy.
*The premium analysis included a total of 36 quotes for a 2010 Honda Accord driven by a 30-year-old unmarried male who lives in the 90039 ZIP code in Los Angeles.