Mary Lou Jay

Accidents can be costly, even for drivers with good auto insurance coverage. They have to pay deductibles and may have to assume some or all of the costs of a rental vehicle.

Now they (and their auto insurance companies) may find themselves faced with yet another bill -- an accident response fee.

An accident response fee is a charge that a local fire department, police department or municipality levies for responding to an accident scene. In some jurisdictions, the insurance company receives the bill; in others, it's the driver who is told to pay up. Some municipalities charge anyone involved in the accident, while others send bills only to the at-fault driver. Some jurisdictions bill only non-residents, according to the Insurance Information Institute.

New York is the latest city to propose allowing municipal response fees. Local governments see the fees as a way to pay for important services at a time when their budgets are squeezed and citizens aren't likely to support tax increases. They compare it to a user fee charged for other services that a city provides -- a bill for water use, for example.

Emergency response fees vary from jurisdiction to jurisdiction, but may run anywhere from $100 to $2,000, according to the Insurance Information Institute. Some insurance companies refuse to pay the bills because their policies cover only medical expenses. When insurers won't pay, the drivers involved in the accident may get billed instead.

The number of municipalities that impose accident response fees has been growing, in part because of a push by third-party companies that collect the fees and charge a sometimes hefty percentage of the money they bring in, according to the Insurance Information Institute. Cities are willing to turn the job over to these agencies because they get the benefits (more money) without the expense of setting up a collection system.

Opposition to accident response fees (dubbed "crash taxes" by critics) is increasing. Opponents, led by auto insurance companies, argue that emergency response is a service that citizens already pay for through taxes, so charging for it amounts to double taxation or a back-door tax. The Insurance Information Institute reports that 10 states have banned municipalities from charging these fees.

Jurisdictions that have adopted accident response fees say that these fees won't affect the cost of auto insurance. Yet insurance companies, as well as the trade group Property Casualty Insurers Association of North America, insist that absorbing the cost of accident response fees will cause everyone's premiums to rise. And those higher premiums would penalize drivers who follow mandatory insurance laws, letting scofflaws off the hook.

There's another possible drawback to emergency response charges, according to the American Insurance Association, which opposes the fees. They could change drivers' perception of an emergency responder from someone who performs rescues to someone simply out to make a buck. Drivers who know they'll be charged may be less likely to call for help when they need it.